BCBS Met, Discussed COVID Impact and Finalized CVA Risk Framework
BCBS held meetings to discuss a range of policy issues and to review the impact, to date, of the COVID-19 pandemic on the global banking system. In addition to its discussion related to COVID-19, BCBS approved final revisions to the credit valuation adjustment risk framework, which will be published in the coming weeks. In another key development, BCBS approved a technical amendment on the prudential treatment of non-performing loan securitizations, which will be published for consultation next week.
The following are the additional outcomes of the meetings:
- BCBS reviewed the responses received to its discussion paper on the prudential treatment for crypto-assets and approved a workplan for the next phase of the work, with a view to future consultation.
- Upon reviewing the domestic regulatory and supervisory measures taken by members in response to the crisis, BCBS agreed to submit a stocktake of these measures to FSB for the report to the G20 Finance Ministers and Central Bank Governors' virtual meeting in July 2020.
- Members took stock of banks' progress on benchmark rate reforms and discussed potential regulatory implications stemming from banks' transition to alternative reference rates. BCBS places high priority on this issue and expects all banks to be adequately prepared to meet the transition timeline.
- BCBS viewed a measured draw-down of the Basel III buffers of banks to meet these objectives as both anticipated and appropriate in the current period of stress. It highlighted that supervisors will provide banks sufficient time to restore buffers taking account of economic and market conditions and individual bank circumstances.
- BCBS will continue to coordinate the work on cross-sectoral financial issues with the FSB and other standard-setting bodies.
The current crisis underscores the importance of a resilient banking system and a prudent regulatory framework. The measures taken by BCBS at the onset of the pandemic have helped mitigate some of the short-term financial stability risks. All members reaffirmed their expectation of full, timely, and consistent implementation of all Basel III standards based on the revised timeline endorsed by the Group of Governors and Heads of Supervision. The impact and response of pandemic vary across jurisdictions and the global economic outlook remains uncertain. Banks and supervisors must remain vigilant to the risks and vulnerabilities stemming from the pandemic to ensure that the global banking system remains financially and operationally resilient. BCBS will continue to monitor the vulnerabilities and risks to the global banking system from COVID-19 and will pursue additional measures if needed.
Related Link: Press Release
Keywords: International, Banking, COVID-19, Basel III, CVA Risk, NPL, Securitization, Crypto Assets, Benchmark Reforms, BCBS
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
ESRB Announces Second Set of Actions in Response to COVID CrisisRelated Articles
EBA Updates Filing Rules for Supervisory Reporting
The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
EBA Publishes Standards on Disclosure of Investment Policy Under IFR
The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).
APRA Finalizes Guidance for New Prudential Standard on Remuneration
The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.
OCC Updated LIBOR Self-Assessment Tool for Banks
The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).
TCFD Updates Guidance for Financial Disclosures on Climate Risk
The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
BCBS Report Examines Progress on Adoption of Basel III Framework
The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.
ACPR Implements Updates Related to DPM Version 3.1
The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.
EBA Note Examines Transition Risks of Benchmark Rates
The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.
