BaFin Sets Out Work Objectives for 2022-2025
The Federal Financial Supervisory Authority of Germany (BaFin) has set ten medium-term objectives for 2022 to 2025. These objectives relate to the stability, security, and operational resilience of the supervised companies; the identification of problem companies; the intensification of money laundering prevention; the strengthening of consumer protection; the financial reporting enforcement and market supervision; the consideration of aspects of sustainability and innovation in supervisory activities; and the modernization and human resource development BaFin.
Over the coming years, BaFin intends to make significant progress in all of the identified areas in the following ways:
- BaFin will work to ensure that the financial system and the companies it supervises are resilient to stress in multiple scenarios—particularly interest rate and market scenarios—in terms of both capital adequacy and liquidity adequacy. To this end, BaFin will focus on own scenario analysis and assess the long-term viability of business models, especially in light of digitalization.
- BaFin will monitor the resilience of the companies it supervises—with a focus on their technology platforms—in respect of their operational stability and security. It will focus on combating the sharp increase in cyber risks and the changes in companies’ risk profiles caused by the fragmentation of the value chain, especially due to the outsourcing of material activities and processes.
- BaFin will identify weak companies at an early stage—in addition to the companies with problematic business models, inadequate control systems, or insufficient governance. BaFin will take corrective measures and utilize well-prepared resolution strategies to oversee the market exits that become necessary, seeking to keep losses to a minimum.
- BaFin plans to step-up its supervisory activities in the area of anti-money laundering, will cooperate with all of the relevant entities in efforts to prevent money laundering, and will commit to effective European anti-money laundering supervision.
- BaFin considers issues of sustainability in its supervisory activities and will work to combat greenwashing. The focus will also be on the analysis and mitigation of financial risks for supervised companies and on their compliance with disclosure requirements.
- BaFin has a comprehensive understanding of how new technologies are being used in the market, the risks they involve, and their impact on new and old business models. It will continue to focus on the use of artificial intelligence in finance and the challenges this entails for effective supervision.
Related Links
Keywords: Europe, Germany, Banking, Operational Resilience, Cyber Risk, Disclosures, Artificial Intelligence, Resolution Framework, BaFin
Previous Article
ACPR Issues Updates on RUBA and CREDITIMMO TaxonomiesRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
