BCBS has set out the strategic work priorities, as part of its the work program for 2021-22. Going forward, the Basel III-related work will focus on monitoring the full, timely, and consistent implementation of standards by the Basel Committee members and completing an evidence-based evaluation of the effectiveness of these Basel reforms. Other strategic priorities involve ensuring recovery and resilience post COVID-19, addressing technology and climate-related risks, and increasing supervisory cooperation in the areas of technology, operational resilience, and data governance.
The work program, which was recently endorsed by GHOS, is focused on the following three key themes:
- Resilience and recovery from COVID-19 crisis. Work in this area includes monitoring and assessing risks and vulnerabilities to the global banking system, drawing on supervisory insights, and conducting thematic assessments. Where deemed relevant, BCBS stands ready to deploy additional policy and/or supervisory measures to mitigate these risks. BCBS will monitor the implementation and unwinding of domestic measures taken by members during the pandemic, with a view to a consistent implementation of the Basel III framework. In parallel, BCBS is conducting an evaluation of the initial lessons learned from COVID-19 with regard to the Basel III standards. An interim report on this analysis will be finalized by the Summer of 2021 and will be followed by subsequent updates. The findings of BCBS will also form part of the interim and final reports of FSB to the G20 leaders.
- Mitigation of medium-term risks and trends. BCBS will pursue a forward-looking approach to identifying, assessing, and mitigating medium-term risks and structural trends to the banking system. This includes work related to the ongoing digitalization of finance, climate-related financial risks, and the impact of a low-for-long interest rate environment on business models of banks. BCBS will also finalize outstanding initiatives related to mitigating risks and structural trends, such as the prudential treatment of banks' crypto-assets exposures and banks' disclosure requirements for market risk and sovereign exposures.
- Strengthening of supervisory coordination and practices. BCBS will pursue a range of initiatives aimed at strengthening supervisory coordination and practices. The use of artificial intelligence/machine learning in banking and supervision, along with broader issues related to the use of technology in supervision (suptech) is on the agenda. Focus areas will also include leveraged lending and collateralized loan obligations, data and technology governance by banks, and insights and supervisory approaches on operational resilience, with a focus on cyber security. BCBS will continue to cooperate with other global standard-setting bodies and international fora on cross-sectoral supervisory issues, including cross-border payments, nonbank financial intermediation, benchmark rate transition and foreign-exchange settlement risk. BCBS will pursue further initiatives to promote the role of proportionality in bank regulation and supervision, including publishing the results of a survey on current and prospective plans for proportionality for 90 jurisdictions, conducted jointly with the World Bank. Building on this stocktake, BCBS plans to develop practical guidance on the use and design of a proportionate regulatory and supervisory framework, for voluntary use by jurisdictions.
Keywords: International, Banking, Work Program, COVID-19, Climate Change Risk, Market Risk, Operational Resilience, Suptech, Cyber Risk, Data Governance, Basel, Disclosures, BCBS
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticlePRA on Regulatory Treatment of Loans Under Mortgage Guarantee Scheme
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.