Basel III introduced a comprehensive package of capital reforms to bolster the resilience of the global banking system. While the standard supports regulatory convergence across jurisdictions by establishing a common minimum set of requirements, it also gives national authorities flexibility to exceed the minimum standards. Heterogeneous applications of Basel III across jurisdictions have fuelled perceptions of an uneven playing field and have become central to current debates on how regulation may influence banks' competitiveness.
This paper documents the various components that make up the overall capital requirements of global systemically important banks (G-SIBs) and discusses potential drivers of the differences across jurisdictions. The analysis draws on a hand-collected, harmonised data set of risk-based and leverage ratio capital requirements for 29 G-SIBs for 2014–25. The data reveal heterogeneity in how jurisdictions implement various regulatory buffers, supervisory add-ons and/or non-binding supervisory guidance. Differences in required capital ratios also stem partly from banks' different levels of systemic importance. The analysis also highlights significant heterogeneity in the computation of risk-weighted assets (RWA). There is suggestive evidence that differences in capital ratio requirements may compensate for different degrees of conservatism in RWA computations.
Current efforts to modernise national regulatory frameworks may help to simplify the structure of capital requirements but could also affect comparisons across jurisdictions.
JEL classification: G21, G28, F65, P52
Keywords: Basel Framework, banking regulation, capital buffers, capital requirements, financial stability, G-SIBs, macroprudential policy, microprudential policy, supervisory practices