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
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