In his testimony to the British parliament's cross-party Treasury Committee, Bank of England Governor Andrew Bailey expressed optimism regarding the implementation of the Basel 3.1 regime despite uncertainties surrounding the Trump administration's intentions. Bailey acknowledged the controversy in the United States but highlighted the potential benefits of the Basel rules in creating a fair global banking competition environment.
He stated, I remain optimistic that we'll get agreement on it and that we'll get through this...to be fair to the new U.S. administration, we have to give them time to get into place.
The Basel 3.1 reforms aim to finalize international rule changes to enhance the safety of the banking system post the 2008 global financial crisis. However, opposition from U.S. banks persists due to the increased capital requirements that could lower profits for shareholders while reducing the risk to taxpayers.
Given the uncertainties, the Bank of England announced a delay in implementing the standards in Britain until January 2027 to await clarity on the U.S. stance, prompting the European Union to consider its approach.
Bailey emphasized the importance of reaching an agreement on Basel, noting, We have delayed that because of the uncertainty from the U.S. angle due to a competition issue.