Taking the slow road to Basel II

Brazil’s central bank published Basel II implementation guidelines at the end of last year,giving the country’s banks a firm timetable for the introduction of the new framework.What progress have banks made so far? John Ferry investigates

In December, the Banco Central do Brasil published preliminary guidance for its banks to implement Basel II, the global capital adequacy framework that aims to more accurately align banks’ capital requirements with underlying risks. The release does not describe minimum qualifying criteria for the internal ratings-based (IRB) approaches or provide details on the validation of internal models. That, says the central bank, will come later. But it does set out a timescale for when it