Basel Committee Shows Signs of Distrust, Future Conflict

By Donna Borak

Years ahead of when it is due to be implemented, it’s already clear that the Basel III accord will be plagued by serious trust issues. The Basel Committee on Banking Supervision announced last week that it will set up a framework to oversee each member country’s implementation of the capital and liquidity accord. Importantly, the committee said it will release its results publicly and update them on a regular basis so it’s clear which nations are falling behind. The agreement was significant for several reasons, including marking the first concrete effort by international regulators to ensure that competitive disparities don’t develop based on how far along member countries are in implementing Basel III. But it was also viewed as a slap in the face for the U.S., which failed to fully implement the Basel II accord, and a sign of general distrust among member nations. “There is continuing skepticism the U.S. is going to play ball,” said Karen Shaw Petrou, a managing partner at Federal Financial Analytics. U.S. regulators, she says, have tried to reassure other nations by saying, “‘We’re going to do it. We’re going to do it.’ But then month-in, month-out, we don’t. So the Europeans are very understandably saying, ‘Says you.'”