Basel Committee on Banking Supervision (BCBS) – International Banking Regulation Standards

The Basel Committee on Banking Supervision (BCBS) is a body of the Bank for International Settlements (BIS) in Basel. It develops global standards for the regulation, supervision, and risk management practices of banks and has shaped international banking regulation with Basel I, II, and III.

• Basel I (1988): Introduction of the 8% minimum capital standard (credit risk).
• Basel II (2004): Three-pillar approach: minimum capital, supervision, market discipline.
• Basel III (2010–2017): Stronger capital requirements, liquidity buffers (LCR, NSFR), leverage ratio following the 2008 financial crisis.
• AML relevance: The BCBS has published AML/CFT guidelines for banks, including on correspondent banking and PEPs.

The BCBS was established in 1974 by the central bank governors of G10 countries following the collapse of Herstatt Bank. The first Basel Accord (Basel I) of 1988 introduced the 8% minimum capital requirement and was adopted by over 100 countries worldwide. Basel II (2004) significantly refined risk measurement and introduced the three-pillar approach. The global financial crisis of 2007–2009 revealed weaknesses in the framework; Basel III was developed in response and gradually introduced from 2010 onwards. «Basel IV» (final Basel III standards, 2017) addresses output floors for internal models and is to be fully implemented by 2028, though many jurisdictions are behind schedule: the EU enacted CRR3 from January 2025 (FRTB postponed to 2027), the UK PRA delayed Basel 3.1 to January 2027, and US regulators are working on a revised Basel III Endgame proposal expected mid-2026. As of September 2025, only 8 of 20 BCBS members had fully implemented the framework. The BCBS now comprises representatives from 28 jurisdictions worldwide.

Basel standards apply to internationally active banks and are transposed into law by national regulators. Key areas:

• Minimum capital requirements (CET1, Tier 1, Tier 2)
• Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR)
• Leverage Ratio
• Large exposure limits
• Disclosure requirements (Pillar 3)
• AML/CFT guidelines: correspondent banking, PEPs, trade finance

• CET1 minimum capital ratio: 4.5% of risk-weighted assets (7.0% with capital conservation buffer); Tier 1 capital ratio: 6.0% (8.5% with buffer); total capital ratio: 8.0% (10.5% with buffer).
• LCR: Sufficient high-quality liquid assets to cover 30-day net cash outflows.
• NSFR: Stable funding over 1 year.
• Leverage Ratio: At least 3% Tier 1 capital relative to total exposure.
• Annual supervisory review (SREP) by national supervisory authorities.
• AML: Due diligence for correspondent banks; PEP identification and enhanced due diligence.

1 correction:
- CET1 ratio with buffer is 7.0%, not 10.5%
1 update:
- Basel III finalization implementation status (2025/2026) missing
1 clarification.