15 December 2017
visit www.aciworldwide.com

BIS outlines plans to strengthen Basel II

21 November 2008  |  9231 views  |  0 magnifying glass

The Basel Committee on Banking Supervision at the Bank for International Settlements (BIS) has announced plans to address the fundamental weaknesses revealed by the financial market crisis related to the regulation, supervision and risk management of internationally-active banks.

Nout Wellink, chairman of the Basel Committee said that "the Basel Committee's work programme is well advanced and provides practical responses to the financial stability concerns raised by policy makers related to the banking sector."

He added that "the primary objective of the committee's strategy is to strengthen capital buffers and help contain leverage in the banking system arising from both on- and off-balance sheet activities." It will also promote stronger risk management and governance practices to limit risk concentrations at banks.

"Ultimately, our goal is to help ensure that the banking sector serves its traditional role as a shock absorber to the financial system, rather than an amplifier of risk between the financial sector and the real economy," Wellink said.

In its statement, the committee said that the key building blocks of its strategy are:

  • Strengthening the risk capture of the Basel II framework (in particular for trading book and off-balance sheet exposures);
  • Enhancing the quality of Tier 1 capital;
  • Building additional shock absorbers into the capital framework that can be drawn upon during periods of stress and dampen procyclicality;
  • Evaluating the need to supplement risk-based measures with simple gross measures of exposure in both prudential and risk management frameworks to help contain leverage in the banking system;
  • Strengthening supervisory frameworks to assess funding liquidity at cross-border banks;
  • Leveraging Basel II to strengthen risk management and governance practices at banks;
  • Strengthening counterparty credit risk capital, risk management and disclosure at banks; and
  • Promoting globally coordinated supervisory follow-up exercises to ensure implementation of supervisory and industry sound principles.

The Basel Committee expects to issue proposals on a number of these topics for public consultation in early 2009, focusing on the April 2008 recommendations of the Financial Stability Forum. The other topics will be addressed over the course of 2009.

Wellink emphasised that the committee's efforts will be "carried out as part of a considered process that balances the objective of maintaining a vibrant, competitive banking sector in good times against the need to enhance the sector's resilience in future periods of financial and economic stress".

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Banking regulators move to tackle liquidity risk

Banking regulators move to tackle liquidity risk

18 June 2008  |  6078 views  |  0 comments
Basel Committee calls for financial market shock treatment

Basel Committee calls for financial market shock treatment

17 April 2008  |  6379 views  |  0 comments
US bank spending on Basel II to top $1bn in 2009 - study

US bank spending on Basel II to top $1bn in 2009 - study

22 October 2007  |  7161 views  |  0 comments
SunTrust to roll out Reveleus Basel II package

SunTrust to roll out Reveleus Basel II package

12 July 2007  |  6064 views  |  0 comments
Ireland's EBS Building Society selects Misys Almonde for Basel II

Ireland's EBS Building Society selects Misys Almonde for Basel II

09 July 2007  |  4592 views  |  0 comments
First Gulf Bank selects SunGard's BancWare and Adaptiv for Basel II

First Gulf Bank selects SunGard's BancWare and Adaptiv for Basel II

26 June 2007  |  7545 views  |  0 comments
Iceland's Glitnir Bank selects Misys Almonde for Basel II

Iceland's Glitnir Bank selects Misys Almonde for Basel II

10 July 2006  |  6682 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit www.atos.netvisit www.niceactimize.comvisit www.thomsonreuters.info

Top topics

Most viewed Most shared
Deutsche Bank paper hails 'huge' blockchain potentialDeutsche Bank paper hails 'huge' blockchai...
10340 views comments | 17 tweets | 25 linkedin
satelliteRipple completes XRP Lockup
9645 views comments | 3 tweets | 2 linkedin
PSD2: Laying the regulatory foundation for a new age in paymentsPSD2: Laying the regulatory foundation for...
9083 views comments | 17 tweets | 36 linkedin
Alior Bank to use Open API platform and accelerator to create fintech marketplaceAlior Bank to use Open API platform and ac...
7667 views comments | 20 tweets | 11 linkedin
Australian Government amends AML rules to cover digital currenciesAustralian Government amends AML rules to...
7285 views comments | 15 tweets | 24 linkedin

Featured job

Competitive
London, UK (or flexible)

Find your next job