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The Bank of International Settlements (BIS) reports on progress of Basel III implementation

Oliver Gill
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The Bank of International Settlements reported its minutes on 12 October 2016 (Source: Getty)

Key banking reforms to ensure that financial institutions are appropriately capitalised are on track to be finalised according to a European supervisory committee.

The Bank of International Settlements' (BIS) oversight committee on finalising Basel III said that reforms implemented so far had "introduced a comprehensive and wide-ranging strengthening of global bank standards".

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"​In addition to strengthening the regulatory framework, the committee has introduced a range of measures to align incentives and strengthen banks’ governance arrangements. It has continued to improve the effectiveness of supervision," said William Coen secretary general of Basel committee on banking supervision.

Basel III is a framework to ensure that banks have sufficient capital buffers and liquidity as well an attempt to reduce banking leverage – the third accord of the Basel framework focuses on the risk run by financial institutions.

Read more: Basel III at a glance

Despite praising the progress made to date, the committee said some elements of the framework required further improvement and were "unduly complex". It added that it had found a "material variation" between the ways in which banks' risk-weighted asset ratios were calculated.

In response, the committee identified a number of reforms that it hoped to have completed by the end of 2016. These included making capital ratios between banks more comparable and finalising the design and calibration of leverage ratios – in other words the level at which banks have borrowed from other financial institutions.

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