BCBS to Consult on Prudential Treatment of Cryptoasset Exposures
BCBS published a summary of its June meeting, wherein the Committee met to take stock of COVID-19 risks to the banking system and to discuss policy and supervisory initiatives. BCBS reviewed provisioning practices and stressed the importance of using capital and liquidity buffers, reviewed the interim report evaluating impact of Basel framework during Covid-19, and agreed to hold public consultation on the prudential treatment of cryptoasset exposures. The consultation paper is expected to be published this week.
Although banks' exposures to cryptoassets are currently limited, the continued growth and innovation in cryptoassets and related services, coupled with the heightened interest of some banks, could increase global financial stability concerns and risks to the banking system in the absence of a specified prudential treatment. Thus, BCBS has agreed to hold a public consultation to seek the views of external stakeholders on the design of prudential treatment of banks' exposures to cryptoassets. BCBS also plans to publish, in July 2021, a report that provides a preliminary assessment of the impact of the implemented Basel III standards during the pandemic. The interim report forms part of the Committee's broader work program on evaluating its post-crisis reforms and the elements of its findings will be included in the FSB's interim report to G20 Finance Ministers and Central Bank Governors on the financial stability lessons learned from COVID-19.
Related Link: Press Release
Keywords: International, Banking, COVID-19, Basel, Regulatory Capital, Crypto Assets, Cyber Risk, BCBS
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