Basel Committee reaffirms expectation to implement Basel III; finalises guidelines to strengthen banks' counterparty credit risk management; and progresses work to strengthen supervisory effectiveness
Unanimously reaffirms expectation to implement Basel III in full,
consistently and as soon as possible. Finalises guidelines for
strengthening banks' counterparty credit risk management. Progresses
work to strengthen supervisory effectiveness following the 2023
banking turmoil.
The Basel Committee on Banking Supervision
met in Basel on 19–20 November 2024 to take stock of recent market
developments and risks to the global banking system, and to discuss a
range of policy and supervisory initiatives.
Implementation
of Basel III
Committee members unanimously reaffirmed their
expectation of implementing all aspects of the Basel III framework in
full, consistently and as soon as possible. Such a commitment was also
recently reiterated by G20 Finance Ministers and Central Bank
Governors.
As part of its Regulatory Consistency Assessment
Programme, the Committee reviewed and approved the assessment reports
on the implementation of the Net Stable Funding Ratio and large
exposures framework by Korea. The reports will be published next
month.
Non-bank financial intermediation
The
Committee discussed banks' interconnections with non-bank financial
intermediation (NBFI). NBFI continues to grow and evolve in ways that
could present risks and vulnerabilities to the global banking system.
Banks are connected to NBFI through a wide range of direct and
indirect activities and services. Data gaps hinder the effective
measurement and management of risks to banks from their NBFI
interconnections. Banks and supervisors must continue to be vigilant
to these risks and to better gauge the range and materiality of
interconnections.
The Committee reviewed the comments
received to its consultation on guidelines for counterparty credit
risk management. Building on the feedback received, it approved a
final set of guidelines that seek to address weaknesses in banks'
counterparty credit risk management exposed in recent episodes of NBFI
distress. The finalised guidelines will be published next month.
2023 banking turmoil
The Committee discussed its work
to develop a suite of practical tools to support supervisors in their
day-to-day work as part of its efforts to strengthen supervisory
effectiveness in light of the lessons learned from last year's banking
turmoil. This work covers the supervision of liquidity risk and
interest rate risk in the banking book, the assessment of the
sustainability of banks' business models, and the importance of
effective supervisory judgment. An update on this work will be
published in early 2025.
Macroprudential policy
The
Committee took stock of the range of practices adopted by
jurisdictions that set a positive rate for the Basel III
countercyclical capital buffer when risks are judged to be neither
subdued nor elevated. As previously noted, the Committee supports and
sees benefits in the ability of authorities to set such a positive
"cycle-neutral" rate. To that end, it agreed to publish a report on
existing practices to support jurisdictions that wish to apply
positive cycle-neutral rates. The report will be published next month.
Members also discussed the comments received to the
Committee's consultation on measures to address "window-dressing"
behaviour by some banks in the context of the framework for global
systemically important banks. Work on addressing such behaviour will
continue in 2025.
Climate-related financial risks
The
Committee continued to review its proposed Pillar 3 disclosure
framework for climate-related financial risks. It anticipates the
finalisation of this work in the first half of 2025.
Note to
editors The Basel Committee is the primary global standard setter for
the prudential regulation of banks and provides a forum for
cooperation on banking supervisory matters. Its mandate is to
strengthen the regulation, supervision and practices of banks
worldwide with the purpose of enhancing financial stability. The
Committee reports to the Group of Central Bank Governors and Heads of
Supervision and seeks its endorsement for major decisions. The
Committee has no formal supranational authority, and its decisions
have no legal force. Rather, the Committee relies on its members'
commitments to achieve its mandate. The Group of Central Bank
Governors and Heads of Supervision is chaired by Tiff Macklem,
Governor of the Bank of Canada. The Basel Committee is chaired by Erik
Thedéen, Governor of Sveriges Riksbank.
More information
about the Basel Committee is available here.