Zimbabwe: Technical Assistance Report—FSSR Follow up Technical Assistance—Implementation of the Basel II/III Capital Framework

International Monetary Fund

No 2023/351, IMF Staff Country Reports from International Monetary Fund

Abstract: This Technical Assistance Report on Zimbabwe discusses the Financial Sector Stability Review follow-up technical assistance and implementation of the Basel II/III capital framework. The RBZ should update its current capital regulations in line with the Basel II/III framework. Currently, all banks use standardised approaches for calculating risk-based capital requirements in Zimbabwe. The increased granularity and risk sensitivity introduced in the Standardised Approach of Basel III could be a useful approach for calculating capital requirements for credit risk in Zimbabwe. The implementation of the Basel III Standardised Approach for the calculation of capital requirement for operational risk requires some adjustments in banks’ data collection process. In order to implement Basel III capital requirements for market risk, the RBZ should focus on improvement of the trading book identification criteria and a few updates necessary to move to the Simplified Alternative Standardized Approach. The RBZ should conduct impact studies to facilitate assessment of the transition to Basel III capital requirements.

Keywords: capital requirement; RBZ regulation; III framework; capital framework; III framework approach; conservation buffer; Basel III; Basel II; Credit risk; Market risk; Operational risk (search for similar items in EconPapers)
Pages: 44
Date: 2023-10-19
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