At its September 2011 meeting, the Basel Committee agreed to commence a process to review members’ implementation of Basel III. Full, timely and consistent implementation of Basel III will be fundamental to raising the resilience of the global banking system, in maintaining market confidence in regulatory ratios, and in providing a level playing field. The review process is intended to provide additional incentives for member jurisdictions to fully implement the standards within the agreed timelines. This report, as part of the process, provides an update on the regulatory adoption of Basel III by each Committee member. In addition, the Committee plans to review the consistency of members’ regulations with the internationally agreed standards. It also will review the consistency of the measurement of risk-weighted assets across banks and jurisdictions, covering both the banking book and the trading book. The outcome of these reviews will also be included in the updated version of this progress report when they become available.

This report focuses on the domestic rule-making processes to ensure that Basel III is transformed into law or regulation according to the agreed international timelines. At this stage, it does not include the review of the content of the domestic rules. Basel III builds upon and enhances the regulatory framework adopted by Basel II and Basel 2.5, which now form integral parts of the Basel III framework. This report, therefore, reviews members’ regulatory adoption of Basel II, Basel 2.5, and Basel III. Basel II, which improved the measurement of credit risk and included the capture of operational risk, was released in 2004 and was due to be implemented from year-end 2006. The implementation of Basel II was re-affirmed by the G20 Leaders, who committed to complete, where necessary, the adoption of Basel II by 2011.2 Basel 2.5, agreed in July 2009, enhanced the measurements of risks related to securitization and trading book exposures. Basel 2.5 is to be implemented no later than 31 December 2011. In December 2010, the Committee released Basel III, which has set higher levels of capital requirements and introduced a new global liquidity framework.5 The members agreed to implement Basel III from 1 January 2013, according to the transitional and phase-in arrangements. The importance of full and timely implementation of Basel III has also been underscored by the G20 Leaders. At this stage, this progress report focuses on the adoption of the capital requirements measured against risk-weighted assets. The liquidity ratios and the leverage ratio, which have been introduced by Basel III, will be included in the review after the Committee concludes its study on any revisions or final adjustments.