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

_IMF Staff Country Reports, October 19, 2023_

## Source details

**Canonical URL:** [Zimbabwe: Technical Assistance Report—FSSR Follow up Technical Assistance—Implementation of the Basel II/III Capital Framework](https://www.imf.org/en/publications/cr/issues/2023/10/19/zimbabwe-technical-assistance-report-fssr-follow-up-technical-assistance-implementation-of-540727)

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## Bibliographic details
- Published: October 19, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400255854.002

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### Overview
- Purpose: Discusses the Financial Sector Stability Review follow-up technical assistance and implementation of the Basel II/III capital framework for Zimbabwe.
- Key institutional focus: Reserve Bank of Zimbabwe (RBZ) should update current capital regulations in line with the Basel II/III framework.
- Current practice: All banks in Zimbabwe use standardised approaches for calculating risk-based capital requirements.

### Key findings
- Standardised approaches are currently used by all banks in Zimbabwe for risk-based capital calculations.
- The Standardised Approach of Basel III introduces increased granularity and risk sensitivity that could be useful for calculating capital requirements for credit risk in Zimbabwe.
- Implementation of the Basel III Standardised Approach for operational risk requires adjustments in banks’ data collection processes.
- Implementing Basel III capital requirements for market risk requires improvement of 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.

### Policy recommendations
- Update RBZ capital regulations to align with the Basel II/III framework.
- Adopt the Basel III Standardised Approach for credit risk to leverage increased granularity and risk sensitivity.
- Adjust banks’ data collection processes to support the Basel III Standardised Approach for operational risk.
- Improve trading book identification criteria and implement the necessary updates to move to the Simplified Alternative Standardized Approach for market risk.
- Conduct impact studies to assess effects of the transition to Basel III capital requirements.

### Implementation issues and operational considerations
- Data collection: Operational risk capital calculation under the Basel III Standardised Approach requires enhancements to banks’ internal data collection processes.
- Market risk: Moving to the Simplified Alternative Standardized Approach implies clarifying and improving trading vs. banking book identification and implementing targeted regulatory updates.
- Transition assessment: Impact studies are essential for the RBZ to evaluate the quantitative and qualitative effects of adopting Basel III capital rules.

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_Source: https://www.imf.org/en/publications/cr/issues/2023/10/19/zimbabwe-technical-assistance-report-fssr-follow-up-technical-assistance-implementation-of-540727_