THE GLOBAL IMPLEMENTATION OF BASEL II: PROSPECTS AND OUTSTANDING PROBLEMS

This paper reviews prospects for the implementation of Basel II, risks due to the changes involved, and features which may affect international trade in banking services. The discussion on prospects summarizes data in a survey conducted by the Basel-based Financial Stability Institute (FSI) of supervisors in countries, which do not belong to the Basel Committee on Banking Supervision (BCBS). More than 90 countries participating in this survey have decided that they will implement Basel II, although the challenge to supervisors will be great as nearly a quarter of them to upgrade their skills. The discussion also covers other less systematic information, related to the implementation in member, as well as non-member countries of the BCBS, such as surveys of banks in developed countries and the impact of Basel II on capital requirements in the EU. Additional problems for implementation may result from disagreements between supervisory authorities in different countries as to the way in which Basel II should be implemented for banks with cross-border operations.