Armenia’s central bank experts looking into expediency of introducing Basel iii standards: CB chairman

YEREVAN, November 17, /ARKA/. In an exclusive interview with ARKA news agency, Arthur Javadian, chairman of Armenia’s Central Bank, said Central Bank experts were looking into the expediency of introducing here the Basel III Standards, which are not yet approved finally by appropriate international organizations.

In his words, the rules regulating banking activity in Armenia are quite tough if compared to Basel II Standards being closer to the proposed Basel III Standards. Mr. Javadian said the final decision for Armenia will be made after a thorough examination and discussions. He recalled that before announcing the new criteria the Basel Committee and the Financial Stability Council had made a qualitative impact assessment to determine the influence of new capital and liquidity standards on GDP.

According to Arthur Javadian, the assessment results show that at the initial stage they will be having a restrictive influence on economic growth, but the midterm benefits will exceed the expenditures needed to introduce the new requirements.

He said no such assessment was made for Armenia, ‘but since the level of financial mediation in transitional countries, including Armenia, is lower than in developed countries, the impact of potential influence will be lower.

The Basel Committee of global central bankers and regulators, made up of representatives of 27 countries approved a "Basel III" package in September to toughen up global capital and liquidity requirements for banks from 2013 with full effect by 2019.

One of the committee’s package of recommendations will increase the minimum common equity that banks will hold to 7%. The committee has also included an additional counter-cyclical buffer of up to 2.5% of risk-weighted assets, which regulators can impose when they think credit is flowing freely. -0-