Key Points:
Australia's overall compliance assessment with the
Basel III capital framework is technically qualified.
In March 2014, Australia's capital framework was assessed
under the Basel Committee's Regulatory Compliance Assessment
Programme (RCAP) to be overall compliant with the
Basel Capital framework, notwithstanding that it diverges from the
Basel capital standards in two areas: the definition of capital and
the internal ratings-based (IRB) approach to
credit risk.
Even though these areas of divergence were assessed as material
by the RCAP team, they are quite technical in nature and have not
affected Australia's overall compliance assessment. In light of
this it is not clear whether the areas of divergence will be
corrected in the future. It is possible that they could remain as
permanent departures which reflect regulatory settings or
interpretations that are appropriate for Australia's domestic
capital framework.
