Switzerland has adopted the Basel II Accord and it is due to come into force next January. According to experts at InfoWatch, Swiss banks could gain a significant competitive edge as a result of adhering to the Basel II provisions so quickly.
Last Friday Switzerland adopted the Basel II Accord that regulates the relationship between capital requirements and asset risk. Swiss banks have until January 2007 to start incorporating the new rules.
The Federal Council on Friday formally incorporated into Swiss law the Basel II accords. A government statement said that no legislative changes had been necessary and that the new framework was being adopted in a new statute. The new framework is in line with a similar standard adopted by the European Union and the statement said no distortion to competition would arise for international banks.
The new statute comes into effect in January and banks will be allowed to bring on board the new capital standards in the course of next year. This is out of step with US banking regulators who have proposed implementing a modified version of Basel II that would include safeguards against a drop in bank capital levels for about only 11 major US banks and will only come into force at the beginning of 2008 at the earliest.
“It appears that Swiss bankers share the view that Basel II has a positive effect on the competitiveness of banks and are sticking rigidly to their schedule. It makes the US delays all the more puzzling, because now American banks risk being isolated when it comes to carrying out international banking operations,” says Denis Zenkin, marketing director at InfoWatch.
Source: Reuters
