Prudential regulation of credit institutions and investment firms The Basel III Standards
Coordinated international standards are critical to improving the resilience of the global banking system and encouraging a predictable and transparent regulatory environment. The Basel Committee on Banking Supervision (BCBS), of which the Bank of England and PRA are members, sets global prudential standards for internationally active banks (the Basel standards).
	In response to the global financial crisis of 2007/08, the BCBS agreed the Third Basel Accord (Basel III standards), beginning in December 2010. These standards sought to strengthen the existing framework, notably by improving the quality and quantity of financial resources banks are required to maintain and expanding requirements to cover a wider set of risks that banks are exposed to. The BCBS also agreed some entirely new prudential measures, including macroprudential capital buffers, additional capital buffers for global systemically important banks, a minimum leverage ratio, and liquidity requirements, to help ensure banks are able to meet both short-term and long-term financial obligations.
	During the global financial crisis, significant variations in the calculation of risk weighted assets (RWAs) across institutions led to stakeholders losing confidence in risk-weighted capital ratios reported by banks. From 2017 onwards, the BCBS finalised a package of reforms to the Basel III standards (this is sometimes referred to as Basel 3.1). The finalised reforms aim to restore credibility in the calculation of RWAs and to improve the comparability of banks’ capital ratios, without significantly increasing capital requirements at a global level. The internationally agreed deadline for Basel 3.1 implementation is currently 1 January 2023.
	The UK played an active role in negotiating and agreeing Basel III, as finalised by Basel 3.1, and remains committed to its full, timely and consistent implementation alongside other major jurisdictions. This Act enables HM Treasury and the UK Regulators to implement those remaining Basel standards that have were not yet incorporated into the UK prudential framework at the time the Act was passed.