The Basel Committee on Banking Supervision published the results of its latest monitoring exercise late yesterday, Australian time. A total of 227 banks participated in the study, comprising 102 Group 1 banks (defined as internationally active banks with Tier 1 capital of more than €3 billion) and 125 Group 2 banks (ie representative of all other banks).The core assumption is that the final Basel III package is fully in force, based on data as of 31 December 2013. The testing showed that "most" large internationally active banks now meet the Basel III risk-based capital minimum requirements. Capital shortfalls have been further reduced, relative to the target levels. For example, at the Common Equity Tier 1 (CET1) target level of seven per cent (plus the surcharges on G-SIBs as applicable), the aggregate shortfall for Group 1 banks is €15.1 billion, compared to €57.5 billion on 30 June 2013. Under the same assumptions, the capital shortfall for Group 2 banks included in the sample is estimated at €2.0 billion for the CET1 minimum of 4.5 per cent and €9.4 billion for a CET1 target level of seven per cent. This represents a decrease compared to the previous period of €10.4 billion and €18.3 billion, respectively.The average CET1 capital ratios under the Basel III framework across the same sample of banks are 10.2 per cent for Group 1 banks and 10.5 per cent for Group 2 banks.Basel III's Liquidity Coverage Ratio will come into effect on 1 January 2015. The minimum requirement will be set initially at 60 per cent and then rise in equal annual steps to reach 100 per cent in 2019. The weighted average LCR for the Group 1 bank sample was 119 per cent on 31 December 2013, up from 114 per cent six months earlier. For Group 2 banks, the average LCR remained unchanged at 132 per cent. Basel III also includes a longer-term structural liquidity standard - the Net Stable Funding Ratio, with 78 per cent of the 208 banks in the NSFR sample reporting a ratio that met or exceeded 100 per cent, while 88 per cent of the banks reported an NSFR at or above 90 per cent.