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
EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis
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.
EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
BCBS and EBA Publish Results of Basel III Monitoring Exercise
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
PRA Updates Timeline for Final Basel III Rules, Issues Other Updates
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
US Treasury Sets Out Principles for Net-Zero Financing
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
EC Launches Survey on G7 Principles on Generative AI
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
