Basel III is a set of international banking-supervision rules named after the Swiss home of the Bank for International Settlements (BIS), a club of central banks. The rules grew out of the "Principles for Sound Liquidity Risk Management and Supervision", released by the BIS during the global financial crisis of 2007-09, and led to vast new protective capital buffers for banks.
In March 2026 the Federal Reserve reduced extra capital charges for the biggest banks and relaxed some of the more onerous Basel "endgame" rules proposed in 2023, freeing up as much as $54bn in capital across the American banking sector, according to Morgan Stanley. The Fed also dropped the concept of an "output floor"—a backstop meant to limit how much banks can rely on their own assessments of the riskiness of their assets. The output floor was a victory for American regulators, who squeezed the concession from their European peers in 2017.
European lenders fear a competitive disadvantage if they face stricter rules than their American rivals. The Association for Financial Markets in Europe (AFME) complains that 11.8% of EU banks' capital is "common-equity tier 1", the safest sort, compared with 10.1% in America. AFME's proposal for cutting European capital requirements by around 2.3 percentage points would free up around EUR281bn ($329bn) in capital.
In December 2025 the Bank of England—which in 2023 was given a secondary mandate to promote international competitiveness and growth—eased the overall capital requirement for British banks from 14% to 13% of their risk-weighted assets, the first such reduction since the current rules were put in place a decade ago, though one that remained Basel-compliant. On April 22nd 2026 the European Commission said it might delay by three years Basel rules for how banks calculate risk capital for trading activities, which were due to come into effect next January.
Switzerland has bucked the trend. In mid-April 2026 the Swiss government confirmed new steep capital requirements, raising the requirement for UBS, the country's last megabank, by some $20bn.
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