RCAP: role, remit and methodology
The lessons of the global financial crisis have highlighted the need for full, timely and consistent implementation of the Basel standards to underpin confidence in banks, prudential ratios and a level playing field.
Recognising the importance of implementation, the Committee established the Regulatory Consistency Assessment Programme (RCAP) in 2012.
Role and remit
Through the RCAP the Committee seeks to ensure full, timely and consistent implementation of the Basel III framework, and thus to contribute to global financial stability.
The RCAP monitors adoption of Basel III standards by member jurisdictions (timeliness), assesses implementation across member jurisdictions (consistency) and assesses implementation across banks (outcomes).
The RCAP also supports the Financial Stability Board's (FSB) monitoring of the implementation of the agreed G20 financial reforms.
Methods
Monitoring reports focus on the status of adoption of all Basel III standards in member jurisdictions to ensure that these standards are transposed into national law or regulation according to the internationally agreed time frames.
Jurisdictional assessments review the extent to which domestic regulations are consistent with the minimum Basel requirements agreed by the Committee and help identify material gaps in such regulations. To date, the focus has been on risk-based capital standards, the Liquidity Coverage Ratio (LCR) and the systemically important bank (SIB) framework. Assessments of the net stable funding ratio (NSFR) and large exposures framework will start from 2018. The programme will expand in due course to cover other Basel III standards."
Thematic assessments examine the implementation of the Basel requirements at the individual bank level and seek to ensure that prudential ratios are calculated consistently by banks across jurisdictions to improve comparability across outcomes.
RCAP Handbook
The Handbook for jurisdictional assessments (the Handbook) contains in a single document the guidance and principles for RCAP assessors, assessed jurisdictions and experts seeking background information on RCAP issues and implementation topics.
The Handbook is a flexible compendium: guidance and principles are revised or elaborated further as the RCAP evolves. It is updated periodically based on lessons learnt from jurisdictional assessments. It is also a reference for jurisdictions intending to carry out their own implementation reviews. As such, it could also be used for training and preparation purposes.
The Handbook presents a general framework as well as specific methodologies for assessing a regulatory framework's quality and consistency. The framework is sufficiently general to accommodate differences in structural and institutional factors across jurisdictions.
Other useful documents:
- RCAP Questionnaire: Risk-based capital
- RCAP Questionnaire: Liquidity Coverage Ratio
- RCAP Questionnaire: Revised Pillar 3 disclosure requirements
- RCAP Questionnaire: Large exposures
- RCAP Questionnaire: Net Stable Funding Ratio