Current focus of the Basel Committee: Raising the bar
Date
15/11/2012
On the 15th of November, Stefan Ingves, Governor of Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision (BCBS) held a speech at a joint conference organised by the BCBS, the Association of Supervisors of the Banks of Americas and the Financial Stability Institute, in which he gave an update on the current focus of the BCBS.
He noted that over the last years the BCBS has been working hard on regulatory reforms, not just in the form of Basel III, but also the work completed on Systemically Important Banks, and the work still in train on the trading book, securitisation and large exposures. However, he highlighted that strong international regulations will be ineffective if they are not put into practice or if the associated supervisory regime is weak. Because of this the BCBS has been proactive in making sure that the international agreements are implemented fully, in a timely and consistent manner, and that the Core Principles have been updated to make use of the supervisory lessons learnt from the financial crisis. Although the BCBS reaction has been bold Governor Ingves highlighted that the BCBS need to raise the bar in all these three areas if to achieve a robust and resilient financial system for the future.
Governor Ingves also acknowledged that a number of areas of the regulatory framework have become increasingly complex over the years. Although risk sensitivity is a crucial part of the regulatory framework, there is a trade-off between precision and simplicity. To strike the right balance the BCBS has over the last year been evaluating ways in which the framework can be simplified, without materially altering its underlying objective or strength.
