GHOS Endorses Coordinated Approach to Mitigate COVID Risks for Banks
The Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS, endorsed a coordinated approach to mitigate COVID-19 risks to the global banking system. The GHOS members agreed to mark, with the present agreement on the Basel III framework, a clear end to the post-crisis Basel III policy agenda. Any further potential adjustments to Basel III will be limited in nature and consistent with the evaluation work of BCBS. Going forward, the Basel III-related work of BCBS will focus on monitoring the implementation, timeliness, and consistency of Basel standards through the Regulatory Consistency Assessment Program as well as completing an evidence-based evaluation of the effectiveness of these reforms, also taking into consideration the lessons learned from the COVID-19 crisis.
The GHOS also endorsed a series of recommendations from the Basel Committee to focus its policy and supervisory agenda on future risks to the global banking system and its vulnerabilities. The recommendations followed a strategic review conducted by the Committee over the past year. The future work of the Basel Committee will focus on new and emerging topics, including structural trends in the banking sector, the ongoing digitalization of finance, and climate-related financial risk. Against the backdrop of the evolving risks and vulnerabilities in light of the ongoing COVID-19 crisis, GHOS members tasked the Basel Committee with continuing to pursue a coordinated approach in responding to the crisis, to preserve a global level playing field, and to avoid regulatory fragmentation. The approach comprises the following elements:
- Ongoing monitoring and assessment of vulnerabilities and risks to the global banking system from COVID-19, along with information-sharing of supervisory insights during the crisis
- Encouraging the use of flexibility embedded in the Basel framework, where relevant
- Monitoring the implementation of temporary adjustments to mitigate current risks to the banking system, to ensure they are consistent with the objectives of the Basel framework and are unwound in a timely manner
- Adopting additional global measures in a coordinated manner, where necessary and prudent
The oversight body of BCBS noted that using capital and liquidity resources to help banks to absorb shock during the ongoing COVID-19 crisis "should take priority at present." GHOS members strongly support the repeated guidance from the Basel Committee that a measured drawdown of these buffers is appropriate in the current period of stress and until the COVID-19 crisis is over. After the crisis, supervisors will provide banks with sufficient time to rebuild their buffers, taking account of economic, market, and bank-specific conditions.
Related Link: Press Release
Keywords: International, Banking, COVID-19, GHOS, RCAP, Basel, Regulatory Framework, Liquidity Risk, Climate Change Risk, Regtech, 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.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
FDIC Notice on Renewal of Collection on Regulatory Capital RulesRelated 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.
