For industry experts, the launch of a softer version of the Basel III framework simply represents a tacit recognition by supervisors that stricter capital requirement rules could have unintended consequences for the global economy. The revision of the previous Basel III proposals includes an extension of eligible assets held by banks to count in their liquidity buffers. A less severe calibration for certain cash flows and a phasing-in arrangement from January 2015 to 2019 are also planned. According to Michel Barnier, commissioner for internal market and services at the European Commission, the treatment of liquidity is fundamental, both for the stability of banks as well as for their role in supporting wider economic recovery.
James Walsh, senior policy adviser at the National Association of Pension Funds (NAPF), added that there was no immediate connection between the Basel III regime and the new IORP Directive, as different institutions had set the respective rules. "However", he said, "it is interesting to see here what happened with Basel III, and it may be that, in due course, some of the capital requirement rules within the revised IORP Directive will prove difficult to introduce".
Pension representatives also stressed that the only link between Solvency II – and, ultimately, the revised IORP Directive – and the regulatory framework for banks was based on the structure set by the Basel II regulation, which is still in use until Basel III is implemented. Additionally, even though Basel III may indirectly influence IORP II via the Solvency II regime, it is the longer-term capital adequacy requirements rather than liquidity that are of concern to pension funds.
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