Implementation assessments of the LCR in China, the European Union and the United States published by the Basel Committee

03 July 2017

The Basel Committee on Banking Supervision published reports assessing the implementation of the Liquidity Coverage Ratio (LCR) in China, the European Union and the United States.

Full, timely and consistent adoption and implementation of Basel standards is critical to:

improve the resilience of the global banking system

promote confidence in prudential ratios

encourage a predictable and transparent regulatory environment for internationally active banks

The Basel Committee and its governing body, the Group of Central Bank Governors and Heads of Supervision, have therefore set as a high priority the full and effective implementation of Basel standards within the globally agreed time frame. The Committee closely monitors and assesses three dimensions - timeliness, consistency and outcomes - on a regular basis.

The Basel Committee established a comprehensive Regulatory Consistency Assessment Programme (RCAP) in 2012 to monitor and assess the adoption and implementation of its standards, while encouraging a predictable and transparent regulatory environment for internationally active banks.

The RCAP consists of two distinct but complementary workstreams:

• Monitoring - The transposition of Basel III regulatory standards into domestic regulations is monitored on a semiannual basis based on information provided by each member jurisdiction. Monitoring reports (timeliness): a high-level view of progress made by Basel Committee members in adopting Basel III standards
• Assessment - The Committee evaluates the consistency and completeness of the adopted standards, including the significance of any deviations from the Basel III regulatory framework. These consistency assessments are carried out on a jurisdictional and thematic basis:
  • Jurisdictional assessments (consistency) review the extent to which domestic regulations are aligned with the minimum Basel requirements agreed by the Committee and help identify material gaps in such regulations.
    • Follow-up assessments summarise actions taken or planned by members to address findings identified in jurisdictional assessments.
  • Thematic assessments (outcomes) examine the implementation of the Basel requirements at the individual bank level and seek to ensure that prudential ratios are calculated consistently by banks across jurisdictions to improve comparability across outcomes.

The Basel Committee is also involved in other activities related to the implementation of its standards, including quantitative impact studies and work related to global systemically important banks (G-SIBs).

Overall, the LCR regulations in China and the United States are assessed as "compliant" with the Basel framework. This is the highest of the four possible grades.

The EU LCR regulations are found to be "largely compliant", reflecting the fact that most but not all provisions of the Basel standards are satisfied. A "largely compliant" assessment grade is one notch below the highest possible grade.

Press release

RCAP – China

RCAP – EU

RCAP – USA

© BCBS (BIS)