Editing Basel II (section)

==Implementation==

=== International consistency ===
One of the most difficult aspects of implementing an international agreement is the need to accommodate differing cultures, varying structural models, complexities of public policy, and existing regulation. Banks' senior management will determine corporate strategy, as well as the country in which to base a particular type of business, based in part on how Basel II is ultimately interpreted by various countries' legislatures and regulators.{{Citation needed|date=November 2012}}

To assist banks operating with multiple reporting requirements for different regulators according to geographic location, there are several software applications available.  These include capital calculation engines and extend to automated reporting solutions which include the reports required under [[COREP]]/[[FINREP]].

For example, U.S. [[Federal Deposit Insurance Corporation]] Chair [[Sheila Bair]] explained in June 2007 the purpose of capital adequacy requirements for banks, such as the accord:

: There are strong reasons for believing that banks left to their own devices would maintain less capital—not more—than would be prudent. The fact is, banks do benefit from implicit and explicit government safety nets. Investing in a bank is perceived as a safe bet. Without proper capital regulation, banks can operate in the marketplace with little or no capital. And governments and deposit insurers end up holding the bag, bearing much of the risk and cost of failure. History shows this problem is very real ... as we saw with the U.S. banking and S & L crisis in the late 1980s and 1990s. The final bill for inadequate capital regulation can be very heavy. In short, regulators can't leave capital decisions totally to the banks. We wouldn't be doing our jobs or serving the public interest if we did.<ref>{{cite web|url=http://www.fdic.gov/news/news/speeches/archives/2007/chairman/spjun2507.html|title=FDIC: Speeches & Testimony|author=Sheila Bair|work=fdic.gov|access-date=2008-12-16|archive-date=2020-02-04|archive-url=https://web.archive.org/web/20200204170216/https://www.fdic.gov/news/news/speeches/archives/2007/chairman/spjun2507.html|url-status=dead}}</ref>

===Implementation progress===
Regulators in most jurisdictions around the world plan to implement the new accord, but with widely varying timelines and use of the varying methodologies being restricted. The [[United States]]' various regulators have agreed on a final approach.<ref>[http://www.occ.treas.gov/fr/fedregister/71fr55830.pdf OCC Notice of Proposed Rulemaking]</ref> They have ''required'' the Internal Ratings-Based approach for the largest banks, and the standardized approach will be available for smaller banks.<ref>[http://www.federalreserve.gov/newsevents/press/bcreg/20080626b.htm FRB: Press Release, June 26, 2008]</ref>

In India, [[Reserve Bank of India]] has implemented the Basel II standardized norms on 31 March 2009 and is moving to internal ratings in credit and AMA (Advanced Measurement Approach) norms for operational risks in banks.

Existing RBI norms for banks in India (as of September 2010): Common equity (incl of buffer): 3.6% (Buffer Basel 2 requirement requirements are zero); Tier 1 requirement: 6%. Total Capital: 9% of risk-weighted assets.

According to the draft guidelines published by RBI the capital ratios are set to become: Common Equity as 5% + 2.5% (Capital Conservation Buffer) + 0–2.5% (Counter Cyclical Buffer), 7% of Tier 1 capital and minimum capital adequacy ratio (excluding Capital Conservation Buffer) of 9% of Risk Weighted Assets. Thus the actual capital requirement is between 11 and 13.5% (including Capital Conservation Buffer and Counter Cyclical Buffer).<ref>{{cite web |url=http://rbidocs.rbi.org.in/rdocs/content/pdfs/DRA301211.pdf |title=Archived copy |access-date=2012-01-20 |url-status=dead |archive-url=https://web.archive.org/web/20120522153622/http://rbidocs.rbi.org.in/rdocs/content/pdfs/DRA301211.pdf |archive-date=2012-05-22 }}</ref>

In response to a questionnaire released by the [[Financial Stability Institute]] (FSI), 95 national regulators indicated they were to implement Basel II, in some form or another, by 2015.<ref>{{cite journal|url=http://www.bis.org/fsi/fsipapers06.htm|title=Implementation of the new capital adequacy framework in non-Basel Committee member countries: Summary of responses to the 2006 follow-up Questionnaire on Basel II implementation|website=Bis.org|date=2006-09-25}}</ref>

The European Union has already implemented the Accord via the EU [[Capital Requirements Directive]]s and many European banks already report their capital adequacy ratios according to the new system. All the credit institutions adopted it by 2008–09.

Australia, through its [[Australian Prudential Regulation Authority]], implemented the Basel II Framework on 1 January 2008.<ref>{{Cite web |url=http://www.apra.gov.au/adi/Documents/APRA_IP_PillarII_122007_v3.pdf |title=Information Paper: Implementation of the Basel II Capital Framework |access-date=2011-09-27 |archive-url=https://web.archive.org/web/20111108140552/http://www.apra.gov.au/adi/Documents/APRA_IP_PillarII_122007_v3.pdf |archive-date=2011-11-08 |url-status=dead }}</ref>