The Basel Committee on Banking Supervision recently convened to address pressing issues in the global banking industry.
During the meeting, they discussed the need to initiate consultations on climate and crypto asset disclosures, aiming to enhance transparency and risk management within the financial sector.
The Basel Committee on Banking Supervision is a committee of banking supervisory authorities that was established by the central bank governors of the Group of Ten countries in 1974.
The group which has expanded overtime, 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.
Pillar 3 Disclosure for Banks
In recognition of the growing importance of climate-related financial risks, the Committee has agreed to consult on a Pillar 3 disclosure framework for banks’ exposures to such risks.
The Pillar 3 disclosure framework is a set of requirements for banks to promote market discipline through disclosure. It is part of the Basel III regulatory framework, which aims to strengthen the regulation, supervision, and risk management of the banking sector.
It requires banks to disclose certain qualitative and quantitative information publicly on a regular basis, either as part of their financial reports or in separate Pillar 3 reports.
The framework is composed of three main pillars: minimum capital requirements (Pillar 1), supervisory review (Pillar 2), and market discipline (Pillar 3).
Progressively on this, “the Committee will publish a consultation paper on the proposed framework by November,” Basel said.
Banks and Cryptocurrencies
It also mentioned that it plans to discuss new rules about how banks reveal their dealings with cryptocurrencies.
These rules will go along with the safety standards set in December 2022. It’ll be sharing a paper for public input on these rules very soon.
Other discussions in the meeting centered around the impact of digitalization and financial technology on the financial system, including the provision of banking services.
Additionally, its discussion covered various trends, including the provision of banking services by non-bank intermediaries, often referred to as “Banking as a Service.”
By mid-next year, the Committee plans to publish a report detailing developments in the digitalization of finance and their implications for banks and supervisors.