Industry can't afford any more Basel II delays, says IIF

The Institute of International Finance (IIF) warned today in London that any further delays in implementing Basel II capital accord would cause serious problems.

Daniel Bouton, IIF

The IIF released a report today on the outstanding issues related to Basel II implementation. Daniel Bouton, Société Générale's chief executive and the chairman of the IIF regulatory capital committee, said the most important issue was the problem of staggered implementation. The process has already been thrown off by the decision by US regulator to delay Basel II by a year. Bouton said any more delays would be a mistake.

"It is urgent that we get fast to the certainty that schedules in the big jurisdictions do not create more problems in terms of competition and level playing fields than they solve," Bouton said. "I think we can cope with a few months' lag, but it would be very difficult and costly to cope with a significant number of years of mismatch between the US and the EU."

The IIF also raised the question of the scaling factor, planned to ensure that capital requirements from Basel II are similar to pre-Basel II requirements. A drop in capital requirements was one of the main advantages of the switch to Basel II, Bouton said, and the scaling factor could prove an unnecessary burden during an economic downturn.