Implementation Roadmap

In accordance with the Central Bank’s mandate to regulate financial institutions conferred on it by Section 7 of the Domestic Banks and Financial Institutions Act 2012 (DBFIA) and Section 18 of the International Banking Act (IBA), the Central Bank of Belize is revising the existing capital framework to enhance the resilience and stability of the financial system.

Pillar 1: Minimum Capital Requirement
This phase corresponds to Pillar 1 of the Basel Accords, which relates to the calculation of minimum capital requirements based on the quantification of credit, market and operational risks.  Capital has been tiered into three levels and a minimum percentage has been established for each tier level that is included in the computation of the capital adequacy ratio.  As it pertains to the risk-weighted assets, the denominator, Basel II takes into account the credit rating assigned to an asset in determining its risk category by assigning lower risk profiles to assets that receive higher credit ratings. 

The first phase commenced in November 2018 and was completed in December 2019. 

Pillar 2: Supervisory Review Process
This phase complements the minimum regulatory requirements of Pillar 1 focusing on the Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP).

Prior to the banks being required to submit their ICAAP reports, the Central Bank will be issuing various risk management guidelines that will form the foundation of these annual reports.  The guidelines will establish the minimum expectations for the management of credit risk, operational risk, interest rate risk in the banking book, stress testing, and liquidity requirements.  For its part, the Central Bank will execute the SREP requirements in its execution of its mandate in promoting a sound financial system.

Due to the onset of the pandemic, phase two was delayed and officially launched in October 2020 with an expected implementation time of July 2022.

Pillar 3: Market Discipline
The final pillar reinforces the minimum capital requirements and supervisory review process by requiring additional disclosure requirements to impose market discipline on financial institutions. Pillar III imposes strong incentives on banks to conduct their business in a safe, sound and efficient manner given the additional disclosures which allows market participants to assess the financial soundness of banks operating in Belize.  

The third phase of the project is scheduled to commence in July 2022 and run for six months.  At the completion of the third pillar, the revision of the capital framework would have been completed allowing banks to assess their capital levels under the qualitative and prescriptive requirements of Pillar 1 and the additional assessments allowed under the Supervisory Review Process of Pillar 2.