“Basel III is not a burden” is what Carolyn Rogers, Secretary General of the Basel Committee on Banking Supervision, said in the ECB Supervision Newsletter recently. When I read this quote, my stomach churned, mainly, due to the indifference that an international standard setter could have towards small, less complex, community-based financial institutions such as credit unions. Granted, the point she was trying to make is that the standard is designed to allow healthy, well-capitalized financial institutions to serve the system even during severe stress and thus, the Basel III framework is indeed necessary and not a burden. But it really misses out on the broader effect that the adoption of regulations designed for large, internationally-active, globally-systemic institutions can have on credit unions. The complexity alone of Basel III is a problem and, frankly, makes it difficult for many regulators to understand, let alone banks and credit unions.
This lack of broader appreciation of the effects is precisely why World Council this week called for the Basel Committee to provide clear direction to national level-regulators to be flexible when withdrawing many of the relief measures adopted during the COVID-19 pandemic, so that they will not create unnecessary institutional stress on credit unions. We further called for an additional one-year delay in the implementation of Basel III. It’s time for the Basel Committee to make the framework work for all institutions.
World Council Calls for Pandexit Flexibility from Basel Committee
WOCCU called for flexibility from the Basel Committee on Banking Supervision as it considers the withdrawal of relief measures adopted during the COVID-19 pandemic.
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