Thursday, 23 May 2024
BusinessBIS discusses revisions to the Basel basic principles on banking supervision

BIS discusses revisions to the Basel basic principles on banking supervision

The Banking Supervision Committee of the Bank for International Settlements (BIS) met on February 28 and 29 in Madrid to sign the changes to the Basel basic principles of supervision and evaluate the financial situation and the risks for the sector, where it has been concluded that it is facing “headwinds”, as well as tensions in the real estate sector.

In this sense, members have addressed the interconnections between banking entities with non-banking financial intermediaries, as well as the growing role of private credit. “Banks and supervisors need to remain vigilant in the face of new risks in these areas,” the press release issued concluded.

Likewise, the panel has discussed the contributions made by interested parties on the ‘Basel core principles’. These revisions are based on supervisory insights and structural changes to the banking system since the previous update in 2012. The final rule will be published following the International Conference of Banking Supervisors on April 24 and 25.

The committee has also reviewed a number of empirical analyzes that highlight the window-dressing behavior of some banks in the context of defining global systemically important banks (G-SIBs). ). This regulatory arbitrage seeks to temporarily reduce the perception of banks’ systemic footprint around the reference dates used for public reporting and disclosure of G-SIB scores.

“Fraudulent maneuvers by banks undermine the policy objectives of the committee’s rules and may disrupt the functioning of financial markets,” said the BIS, which stressed that a consultation report will be published in March.

Climate risks and Basel III

Members have also concluded that the field of climate scenario analysis is “dynamic” and that practices are expected to evolve rapidly as scientific knowledge about global warming advances. Consequently, financial exposures to climate will be able to be quantified more accurately.

The BIS has agreed to publish a discussion paper on the analysis of climate scenarios by banks and supervisors to help inform possible future work in this area. This document will be published in the coming months.

Subsequently, the group has assured that the implementation of the Basel III criteria is “progressing adequately”, although with an “uneven” level of application.

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