Improving Banking Supervisory Mechanisms
In the OIC Member Countries
58
Source: World Bank, Bank Regulation and Supervision Survey
As of 2011, most OIC countries use either Basel I or Basel II as the capital adequacy regime
where most of EU-27 countries use Basel II and US use both Basel I and II. Leverage ratio is the
least used regime among OIC countries at a similar fraction compared to EU-27. Leverage ratio
will be an important element of Basel III and OIC countries might impose the requirement as a
part of their capital adequacy regime to reach a more effective regulation of capital.
Figure 38: Capital Adequacy Regimes
Source: World Bank, Bank Regulation and Supervision Survey
Another important point regarding the OIC countries is the autonomy of the supervisory
authority and the scope of supervision. In almost all OIC countries, there is a single supervisory
authority for the banking system which creates an environment immune to conflict among
institutions. However, an important point to note is that in most OIC countries supervisory
authority responsible for the banking supervision also regulates the financial sector. Based on
the available data, fraction of these OIC countries is still lower than EU-27 average.
0%
20%
40%
60%
80%
100%
120%
Which regulatory capital adequacy regimes did you use as of end of 2010?
(Percentage of Yes)
Basel I Basel II Leverage ratio Other