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G20 nations that do not adopt Basel III may face sanctions

Posted: 7 November 2012  |  Source: FINCAD

The world's largest 20 economies (G20) may start discussing how they will penalize nations that do not implement the Basel III capital requirements, officials recently told Reuters.

The new rules – which will require lending institutions in participating countries to increase their capital reserves substantially – are scheduled to be implemented starting in January. Currently, these requirements are scheduled to be adopted over the course of six years. This process is supposed to end in 2019.

The final interpretations of the requirements recommended by the Basel Committee have not yet been created for Europe and the United States, which has made many market participants wonder if the deadline for compliance will be pushed back, according to the media outlet.

Juan Manuel Valle, who is in charge of banking supervision at Mexico's finance ministry, indicated prior to a meeting of G20 finance chiefs that none of the member nations had mentioned the possibility of postponing the deadline but those that did not implement the rules on time would be publicly declared 'non-compliant,' the news source reports.

While some nations have pushed for a more lax timeline or less stringent requirements, some nations have adopted Basel III early. The Philippine Central Bank has announced that the Asian nation will fully implement the requirements starting on January 1, 2014.