LONDON (Reuters) - A U.S. Treasury Department official said on Saturday that the United States remains committed to implementing Basel II capital rules for banks.
Divisions have emerged in London over Treasury Secretary Timothy Geithner's proposals for reform of rules for banks' capital set-aside requirements, with some European officials saying changes already made to Basel II did the job.
"We are committed to moving forward to implement Basel II on the current timetable," a U.S. Treasury official said on the sidelines of the G20 meeting of finance ministers and central bankers.
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G20 draft backs expansionary policy, IMF reform
(Reuters) 09-05-09 - The G20 group of leading powers agreed on Saturday to continue expansionary fiscal and monetary policy until a global recovery was firmly secured, and to raise "significantly" emerging nations' say on the world stage, a draft statement showed.
The draft showed the meeting in London also agreed on global standards for curbing bankers' pay, including clawback for poor performance, but could not come to a deal on actual pay caps, instead asking the Financial Stability Board to study the issue.
The statement, a copy of which was seen by Reuters, gave no details on reform of the IMF but said it expected "substantial progress" to be made on the issue at a summit of world leaders in Pittsburgh later this month.
No compromise yet on IMF quota reform: RussiaInvestopedia.com | Basel II Accord To Guard Against Financial Shocks
Problems with the original accord became evident during the subprime crisis in 2007.
In January 2001 the Basel Committee on Banking Supervision issued a proposal for a New Basel Capital Accord (better known as "Basel II") that, once finalized, will replace the current 1988 Capital Accord. The proposal is based on three mutually reinforcing pillars that allow banks and supervisors to evaluate properly the various risks that banks face. These 3 pillars are:
1. minimum capital requirements, which seek to refine the measurement framework set out in the 1988 Accord (dealing with credit risk, operational risk and market risk),
2. supervisory review of an institution's capital adequacy and internal assessment process, and
3. market discipline through effective disclosure to encourage safe and sound banking practices.
The Basel Committee received more than 250 comments on its January 2001 proposals. In April 2001 the Committee initiated a Quantitative Impact Study (QIS) of banks to gather the data necessary to allow the Committee to gauge the impact of the proposals for capital requirements. A further study, QIS 2.5, was undertaken in November 2001 to gain industry feedback about potential modifications to the Committee's proposals.
In December 2001 the Basel Committee announced a revised approach to finalizing the New Basel Capital Accord and the establishment of an Accord Implementation Group. Previously, in June 2001 the Committee released an update on its progress and highlighted several important ways in which it had agreed to modify some of its earlier proposals based, in part, on industry comments.
During its 10 July 2002 meeting, members of the Basel Committee reached agreement on a number of important issues related to the New Basel Capital Accord that the Committee has been exploring since releasing its January 2001 consultative paper.
In April 2003 the Basel Committee on Banking Supervision has issued a third consultative paper on the New Basel Capital Accord.
