Impact and Implementation Challenges of the Basel Framework for Emerging, Developing and Small Economies

This paper focuses on the impact of the Basel III accord on emerging, developing and small economies. It looks primarily at potential unintended consequences of the new rules. The areas of concern for both banks and regulators are found in increases in risk-weighted assets for trading exposures, in capital replenishments in jurisdictions with weaker governance and less developed financial markets, and in coping with enhanced liquidity requirements in multinational groups. The resulting recommendations concern consistent application of rules in various parts of multinational banks and the provision of adequate supervisory powers for adequate control of the institutions and markets.