President of Uzbekistan Islam Karimov signed a resolution “On measures on further raising financial sustainability of commercial banks and develop their resource bases” on 6 May 2015, which envisages measures on introduction of Basel III standards.

The resolution noted that the Basel Committee on banking supervision developed new standards and recommendations (Basel III standards), which envisages improving normative requirements to commercial banks, including new requirements to capital adequacy and liquidity.

Central Bank of Uzbekistan was entrusted to ensure stage-by-stage introduction of Basel III standards in the country in 2015-2019.

The Central Bank in cooperation with the Uzbekistan Banking Association and commercial banks were entrusted to develop and prove mechanism of establishing interest rates on attracted deposits of commercial banks based on gradual fall of inflation rate, refinancing rate of commercial bank and sustainable macroeconomic figures.

In particular, Uzbekistan will adopt measures to improve normative requirements to set liquidity and capital adequacy of the banks, as well as methods and mechanism of their management in line with Basel III recommendations.

The country plans to introduce coefficient of norm of liquidity coverage, which will be determined as ratio of high quality liquid assets to net inflow of resources with execution time of 30 days, setting minimal requirement on this figure at the level of 100%.

It is also planned to set coefficient of norm of net stable financing, which is determined as ratio of available sum of stable resources to financing to necessary sum of stable financings with setting minimal requirements at the level of 100%.

The country also plans to introduce changes to structure of capital via stage-by-stage increasing minimum regulatory capital adequacy ratio from 10% to 14.5%. It is also planned to increase stage-by-stage minimum capital adequacy ratio of Tier I from 5% to 11%, taking into account the capital conservation buffer of 3% of total assets, weighted with risks. The resolution said that methods of rating operational and market risks will be improved to determine capital adequacy.

Uzbekistan will also introduce “Principles of effective corporate management” in new edition, based on recommendation of the Basel committee on banking supervision. It will include measures on conducting healthy and secure banking practices, establishing professional ethics standards and ensuring transparency of the banks.

The resolution said that the measures will be adopted to improve access to information of the banking activities, including publication of annual and interim reports at the websites of the banks and other ways.

Basel III are new standards for work of the banks, which were developed by the Basel Committee of banking supervision after financial crisis in 2008. Basel III strengthens bank capital requirements by increasing bank liquidity and decreasing bank leverage. Basel III also improves quality of risk management to ensure stability of financial system.