Crossing the Basel III implementation line
Keynote speech by Pablo Hernández de Cos, Chair of the Basel Committee on Banking Supervision and Governor of the Bank of Spain, at the Eurofi High-level Virtual Seminar 2021, 15 April 2021.
Introduction
Good afternoon, and thank you for inviting me to speak at the Eurofi High-Level Virtual Seminar, in association with the Portuguese EU Council Presidency.
It is now well over a year since the start of the Covid-19 pandemic, which is first and foremost a health crisis, with a devastating impact on lives, livelihoods and our longer-term well-being. We have also seen the devastating economic impact resulting from this crisis. To give just one example: by the end of 2022, global GDP is forecast to be up to 4% lower than pre-pandemic projections.
So recent positive health-related developments bring some much-needed rays of hope. These include those regarding vaccines and further advances in diagnostics and medical treatments. There is light at the end of the tunnel.
But there continues to be a high degree of uncertainty related to the outlook, and with it a range of downside risks. These range from the creeping emergence of new variants to bottlenecks in the production, distribution and authorisation of vaccines. Health-related restrictions may continue to be with us for some time, which in turn will continue to impact economic activity. Talk of sharp economic bouncebacks and a revival of the Roaring Twenties may therefore prove to be somewhat premature. Put differently, the tunnel may well lengthen, with the light at its end becoming dimmer.
What are the implications of this backdrop for the global banking system? And how best can banks be "part of the solution" in contributing to a sustainable economic recovery? I will try to provide some answers to these questions in my talk today, focusing primarily on the crucial importance of implementing the Basel III Framework in a full, timely and consistent manner.