BCBS Advances Work on Climate Risk, Cryptoassets, and G-SIB Assessment
The Basel Committee on Banking Supervision (BCBS) announced updates on its work in the areas of climate-related financial risks, cryptoassets, the assessment methodology for global systemically important banks (G-SIBs), and the final Pillar 3 disclosure standards for banks. This announcement follows discussions during the Committee's October and November 2021 meetings, which also had on the agenda the risks and vulnerabilities to the global banking system, in addition to the policy and supervisory initiatives. Later this month, BCBS plans to consult on a set of principles for the effective management and supervision of climate-related financial risks at the internationally active banks.
The following are the other key BCBS announcements:
- Post a review of the comments received on the initial consultation on the prudential treatment of cryptoasset exposures of banks, BCBS plans to further consult on this by mid-2022.
- After discussing the feedback to its earlier proposal for a technical amendment to the process for reviewing the G-SIB assessment methodology, BCBS agreed to proceed with the proposed approach to replacing the existing three-year review cycle of the methodology, with a process of ongoing monitoring and review to ensure that it remains appropriate over time. In the near term, BCBS will review the implications of developments related to the European Banking Union for the G-SIB methodology, including a targeted review of the treatment of cross-border exposures on the G-SIB methodology.
- BCBS approved the final standards for Pillar 3 disclosures for the revised market risk framework and for a set of voluntary disclosures for sovereign exposures of banks, with the final disclosure standards expected to be published in the coming weeks.
- BCBS discussed the impact of the prolonged low interest-rate environment and the evolving outlook on the profitability, business models, and risk-taking behavior of banks. A deep-dive thematic analysis took stock of the cyclical and structural drivers behind interest rate dynamics and bank responses, the degree of heterogeneity across banking systems, and the main supervisory challenges and risks. BCBS will continue to assess these issues.
- Members took stock of the operational resilience of banks, including the reliance on third- and fourth-party service providers. BCBS will continue to assess the supervisory and policy implications of third- and fourth-party and concentration risk, in coordination with other global standard-setting bodies and international forums.
Related Link: Press Release
Keywords: International, Banking, Securities, Climate Change Risk, Crypto Assets, G-SIB Assessment, ESG, G-SIB, Disclosure, Pillar 3, Market Risk, Basel, BCBS
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
Previous Article
US Treasury Report Outlines Regulatory Framework for StablecoinsRelated 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.
