Global foreword - Deloitte

In our view, the fracturing global consensus is increasingly evident in the evolution of bank capital standards. The Basel framework, once the capstone of post-crisis cooperation, is firmly in the political crosshairs. The US has delayed its "Endgame" implementation, with a re-proposal expected in H1 2026 alongside separate proposals for further changes to global systemically important bank surcharges, stress tests, and enhanced supervisory leverage ratios.20 The ripple effects are global.

The EU and UK have already deferred implementing the Fundamental Review of the Trading Book (FRTB) until January 2027. The UK is now consulting on a further delay to 2028 for implementation of the FRTB’s Internal Models Approach, while the EU may adopt relief measures for FRTB which could significantly limit any increases in market risk capital requirements until January 2030.21 22

Basel implementation elsewhere also varies. Switzerland and Canada have fully adopted the standards. In contrast, the AP region remains fragmented: China (Mainland) (“China”), Japan, Hong Kong SAR, and Singapore have fully implemented, while Australia remains a partial adopter, having delayed FRTB and Credit Valuation Adjustment implementation. Elsewhere, progress in other emerging economies is slower.

The substance of what will emerge in the US is as uncertain as its timing. If US rules are re-scaled, how far might they diverge from the agreed Basel standards? Should the US ultimately decline to implement FRTB, jurisdictions yet to implement will likely pause, while those that have implemented will face difficult decisions about how to proceed. For bank boards, this complicates capital planning and strategic capital allocation. The practical answer is scenario-based capital planning across multiple regulatory paths, plus strategic optionality based on business mix, footprint, and market participation.

More fundamentally, delayed and inconsistent implementation places the original purpose of the Basel framework (i.e. strengthening global financial stability through robust, risk-sensitive capital requirements) under strain. Fragmentation also risks introducing new systemic vulnerabilities and creating openings for regulatory arbitrage.

It also raises broader questions about how governments, central banks, and regulators might react to future global shocks, from private credit stress to major operational incidents. While a globally coordinated response, as seen during the Global Financial Crisis, remains the central case, it should not be taken for granted. Firms in their scenario testing may increasingly need to consider the implication of a shock resulting in disjointed, potentially conflicting, national interventions. Regulators may be contemplating similar scenarios and, consequently, may press local or regional entities to operate more autonomously, thereby creating redundancies across areas such as funding, liquidity, and IT systems.