Making Basel III Work for Emerging Markets and Developing Economies: A CGD Task Force Report

86 Pages Posted: 7 Jun 2019

See all articles by Thorsten Beck

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Liliana Rojas-Suarez

Center for Global Development

Date Written: April 23, 2019

Abstract

A sound financial regulatory framework is critical for minimizing the risk imposed by financial system fra­gility. In the world’s emerging markets and developing economies (EMDEs), such regulation is also essential to support economic development and poverty reduc­tion. Meanwhile, it is increasingly recognized that global financial stability is a global public good: recent decades have seen the development of new inter­national financial regulatory standards, to serve as benchmarks for gauging regulation across countries, facilitate cooperation among financial supervisors from different countries, and create a level playing field for financial institutions wherever they operate. For the worldwide banking industry, the international regulatory standards promulgated by the Basel Com­mittee on Banking Supervision (BCBS) stand out for their wide-ranging scope and detail. Even though the latest Basel recommendations, adopted in late 2017 and known as Basel III, are, like their predecessors, calibrated primarily for advanced countries, many EMDEs are in the process of adopting and adapting them, and many others are considering it. They do so because they see it as in their long-term interest, but at the same time the new standards pose for them new risks and challenges. This report assesses the implica­tions of Basel III for EMDEs and provides recommen­dations for both international and local policymakers to make Basel III work for these economies.

Keywords: Basel, financial regulation, banks, emerging markets, proportionality

JEL Classification: G15, G18, G21, G23, G28

Suggested Citation

Beck, Thorsten and Rojas-Suarez, Liliana, Making Basel III Work for Emerging Markets and Developing Economies: A CGD Task Force Report (April 23, 2019). Available at SSRN: https://ssrn.com/abstract=3391886 or http://dx.doi.org/10.2139/ssrn.3391886

Thorsten Beck

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Liliana Rojas-Suarez (Contact Author)

Center for Global Development ( email )

2055 L St. NW
5th floor
Washington, DC 20036
United States

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