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Basel Committee on Banking Supervision

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The Basel Committee on Banking Supervision (BCBS)[1] is a committee of banking supervisory authorities that was established by the central bank governors of the Group of Ten (G10) countries in 1974.[2] The committee expanded its membership in 2009 and then again in 2014. As of 2019, the BCBS has 45 members from 28 jurisdictions, consisting of central banks and authorities with responsibility of banking regulation.[3]

The committee agrees on standards for bank capital, liquidity and funding. Those standards are non-binding high-level principles. Members are expected but not obliged to undertake effort to implement them e.g. through domestic regulation.[citation needed]

Overview

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The committee provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. The committee frames guidelines and standards in different areas – some of the better known among them are the international standards on capital adequacy, the Core Principles for Effective Banking Supervision and the Concordat on cross-border banking supervision.[4] The committee's Secretariat is located at the Bank for International Settlements (BIS) in Basel, Switzerland. The BIS hosts and supports a number of international institutions engaged in standard setting and financial stability, one of which is BCBS. Yet like the other committees, BCBS has its own governance arrangements, reporting lines and agendas, guided by the central bank governors of the G10 countries.[5]

Globalization in banking and financial markets was not accompanied by global regulation. National regulators remained the most important actors in banking practices. They had a capacity problem and an information problem.[6] Therefore, the purpose of the BCBS is to encourage convergence toward common approaches and standards. The committee is not a classical multilateral organization, in part because it has no founding treaty. BCBS does not issue binding regulation; rather, it functions as an informal forum in which policy solutions and standards are developed.[7]

The Basel Committee formulates broad supervisory standards and guidelines and recommends statements of best practice in banking supervision (see bank regulation or "Basel III Accord", for example) in the expectation that member authorities and other nations' authorities will take steps to implement them through their own national systems.[citation needed]

Membership

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Currently, committee members come from Argentina, Australia, Belgium, Brazil, Canada, China, the European Union, France, Germany, Hong Kong, India, Indonesia, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States. The committee's Secretariat is located at the Bank for International Settlements (BIS) in Basel, Switzerland. However, the BIS and the Basel Committee remain two distinct entities.

Until 2009, members included only developed countries: Belgium, Canada, France, Germany, Italy, Japan, Netherlands, Spain, Sweden, Switzerland, United Kingdom and the United States.[8]

Organization

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The Basel committee along with its sister organizations, the International Organization of Securities Commissions and International Association of Insurance Supervisors together make up the Joint Forum of international financial regulators.[citation needed] However, the committee is not autonomous. Although it has latitude, its work is reported to the central bank governors of the G10. It cannot communicate conclusions, nor make proposals, to bodies outside the Bank for International Settlements without the general agreement and support of these governors.[9]

The committee is sub-divided into groups, each of which have specific task forces to work on specific issues:

  • The Standards Implementation Group (SIG)
    • Operational Risk Subgroup: addresses issues related to Advanced Measurement Approach for Operational Risk
    • Task Force on Colleges: develops guidance on the Basel Committee's work on supervisory colleges
    • Task Force on Remuneration: promotes the adoption of sound remuneration practices
    • Standards Monitoring Procedures Task Force: develops procedures to achieve greater effectiveness and consistency in standards monitoring and implementation
  • The Policy Development Group (PDG)
    • Risk Management and Modelling Group: point of contact with the industry on the latest advances in risk measurement and management
    • Research Task Force: facilitates economists from member institutions to discuss research on financial stability in consultation with the academic sector
    • Trading Book Group: reviews how risks in the trading book should be captured by regulatory capital
    • Working Group on Liquidity: works on global standards for liquidity risk management and regulation
    • Definition of Capital Subgroup: reviews eligible capital instruments
    • Capital Monitoring Group: co-ordinates the expertise of national supervisor in monitoring capital requirements
    • Cross-border Bank Resolution Group: compares the national policies, legal frameworks and the allocation of responsibilities for the resolution of banks with significant cross-border operations
  • The Accounting Experts Group (AEG): ensures that accounting and auditing standards help promote sound risk management thereby maintaining the safety and soundness of the banking system
    • Audit subgroup: explores key audit issues and co-ordinates with other bodies to promote standards
  • The Basel Consultative Group (BCG): facilitates engagement between banking supervisors including dialogue with non-member countries

Leadership

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Chair of the Governors and Heads of Supervision

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Committee Chair

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Secretary General

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  • Michael Dealtry (United Kingdom), 1975-1984[9]: 43 
  • Chris Thompson (UK), 1984-1988[9]: 63 
  • Peter Hayward (UK), 1988-1992[9]: 64 
  • Erik Musch (Netherlands), 1992-1997[9]: 64 
  • Danièle Nouy (France), 1997-2003[13]
  • Ryozo Himino [ja] (Japan), 2003-2006[14]
  • Stefan Walter [de] (Germany / United States), 2006-2011[15]
  • Wayne Byres (Australia), 2012-2014[16]
  • William Coen (US), 2014-2019[17]
  • Carolyn Rogers (Canada), 2019-2022[18]
  • Neil Esho (Australia), since 2022[19]

See also

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References

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  1. ^ Basel Committee on Banking Supervision
  2. ^ See the "History of the Basel Committee and its Membership" in http://www.bis.org/bcbs/history.pdf
  3. ^ "Basel Committee membership". Archived from the original on 19 September 2019. Retrieved 26 May 2019.
  4. ^ "About the Basel Committee". bis.org. 28 June 2011. Archived from the original on 27 June 2018. Retrieved 30 August 2011.
  5. ^ "About committees and associations", bis.org, 4 August 2005
  6. ^ Braithwaite, John. (2000). Global business regulation. Drahos, Peter, 1955-. Cambridge [England]: Cambridge University Press. ISBN 0521780330. OCLC 43719184.
  7. ^ Kerwer, Dieter (2005), "Rules that Many Use: Standards and Global Regulation", Governance, 18 (4): 611–632, doi:10.1111/j.1468-0491.2005.00294.x
  8. ^ Chris Marrison (2002). The Fundamentals of Risk Measurement. New York, New York: McGraw Hill. pp. 340–342. ISBN 978-0-07-138627-2.
  9. ^ a b c d e f Goodhart, C. A. E. (Charles Albert Eric). The Basel Committee on Banking Supervision : a history of the early years, 1974-1997. Cambridge, UK. ISBN 9781139117739. OCLC 769341794.
  10. ^ "Agustín Carstens to chair the BIS Economic Consultative Committee and the BIS Global Economy Meeting; Mario Draghi to chair the Group of Governors and Heads of Supervision". Bank for International Settlements. 5 June 2013.
  11. ^ "Tiff Macklem appointed Chair of the Group of Governors and Heads of Supervision, oversight body of the Basel Committee". Bank for International Settlements. 1 April 2022.
  12. ^ "Basel Committee organisation and governance". Bank for International Settlements. 27 December 2016.
  13. ^ Tim Jones (8 January 2014). "Danièle Nouy – Ideal candidate". Politico.
  14. ^ "Ryozo Himino". Financial Stability Board. 29 March 2023.
  15. ^ "Stefan Walter to become new CEO of FINMA". Swiss Financial Market Supervisory Authority FINMA. 24 January 2024.
  16. ^ "Chair of the Australian Prudential Regulation Authority". Australian Treasury. 26 July 2022.
  17. ^ "William (Bill) Coen" (PDF). Toronto Centre. 2020.
  18. ^ "Carolyn Rogers, Senior Deputy Governor". Bank of Canada.
  19. ^ "Neil Esho appointed Secretary General of the Basel Committee on Banking Supervision". Bank for International Settlements. 27 January 2022.
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