Little attention has so far been paid to a novelty feature of the buffer, which can be considered as one of the major improvements of Basel III: reciprocity. This means, for instance, if Germany were to set a buffer of 1% on exposures against domestic borrowers, other jurisdictions would have to impose the same buffer on their banks for cross-border claims against German borrowers.
For instance, we are officially incorporating the BSFIs’ organizational conduct and risk culture in our supervisory framework to further reinforce the public’s trust and enhance the banks’ resilience and stability. We are also intensifying collaboration with industry associations, other agencies and global regulators to ensure that our policies are up-to-date and responsive to the evolving dynamics of the economy and the banking system.