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
Previous ArticleFSC Taiwan Announces Measures to Address Impact of COVID-19 Pandemic
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards
The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.
The Basel Committee on Banking Supervision (BCBS) launched consultation on a Pillar 3 disclosure framework for climate-related financial risks, with the comment period ending on February 29, 2024.
The U.S. President Joe Biden signed an Executive Order, dated October 30, 2023, to ensure safe, secure, and trustworthy development and use of artificial intelligence (AI).
The Monetary Authority of Singapore (MAS) launched an integrated digital platform, Gprnt, also known as “Greenprint.”
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
The Network for Greening the Financial System (NGFS) published its latest set of long-term climate macro-financial scenarios (Phase IV) for assessing forward-looking climate risks.