Basel Refines Core Principles to Elevate Banking Supervision
The Basel Committee on Banking Supervision recently published its revised Core Principles for Banking Supervision. These Core Principles are the global standard for prudential regulation and banking supervision. They serve as a framework of minimum standards for establishing a sound foundation for the regulation, supervision, governance, and risk management of the banking sector. Additionally, non-bank financial institutions that provide deposit and lending services similar to banks can apply these principles to foster financial system stability.
The revision of the Core Principles is needed considering the structural changes in the economy affecting the banking system, such as AI and digitization, as well as developments in the climate debate and geopolitical changes.
The revised Principles made some adjustments and clarifications on the topic of supervisory powers and responsibilities, such as the clarification of macroprudential aspects of supervision, business model sustainability to clarify its relationship to business model analysis, corporate governance and risk framework, climate-related financial risks, financial risks of banks (liquidity risks etc.), and operational resilience to ensure that banks are better equipped to withstand severe operational risk-related events like pandemics and cybersecurity.
Click here for the Press Release.
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