BCBS announced that it continues to assess and address the banking and supervisory implications of COVID-19 and is actively coordinating with FSB and other standard-setting bodies on cross-cutting financial system issues. In the immediate term, BCBS is suspending consultation on all policy initiatives and postponing all outstanding jurisdictional assessments planned in 2020 under its Regulatory Consistency Assessment Program. In the coming days, it will consider additional measures aimed at supporting the financial resilience of banks and the operational resilience of both the banking and supervisory community during these unprecedented times.
BCBS held a conference call on March 20, 2020 to discuss the impact of the rapid worldwide spread of COVID-19 on the global banking system. Member jurisdictions are pursuing a range of regulatory and supervisory measures to alleviate the financial stability impact of COVID-19. These measures target the provision of lending by banks to the real economy and facilitate banks' ability to absorb losses in an orderly manner. The Basel Committee supports the objectives of these measures and notes that members have flexibility to undertake further measures if needed. The Basel III framework includes capital and liquidity buffers that are designed to be used in periods of stress. These include the capital conservation buffer and, by extension, the countercyclical capital buffer and buffers for systemically important banks. They also include banks' stock of high-quality liquid assets (HQLA). Using capital resources to support the real economy and absorb losses should take priority at present over discretionary distributions. HQLA stocks should be used to meet liquidity demands. Many supervisors are already encouraging banks to make use of these tools, which allow for flexibility in responding to the current circumstances. BCBS statement adds that banks and supervisors must remain vigilant in light of the evolving nature of COVID-19 to ensure that the global banking system remains financially and operationally resilient.
Related Link: Press Release
Keywords: International, Banking, Basel III, COVID 19, RCAP, Regulatory Capital, Liquidity Risk, HQLA, BCBS
Previous ArticleBOG Issues Guidance for Banks on Capital Utilization During COVID-19
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.
The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.
The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.
The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.
The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.