Today the Basel Committee published its Report on the impact and accountability of banking supervision. The report is a range-of-practice study on how supervisors around the world define and evaluate the impact of their policies and actions, manage against that impact and then account for it to their external stakeholders, including the government, parliament and the general public.
In response to the global financial crisis, standard-setting bodies and national authorities initiated a broad overhaul of the regulatory framework. The implementation of Basel III makes a necessary and important contribution to strengthening regulation and increasing banks’ resilience. However, enhanced regulation alone is not sufficient to make financial institutions and financial systems more sound and stable. Regulatory reforms must be supported by effective supervision.
The Committee’s report shows that, in recent years, supervisors have revised and strengthened their strategy and practices. Supervision has become more comprehensive and intrusive, and takes into account additional dimensions of a bank’s business. Supervisors have also taken steps to gain more insight into the impact of their activities. Many jurisdictions have developed practices to show how their activities contribute to the soundness and stability of financial institutions and the financial system. Finally, the report elaborates on what constitutes a well-designed system of accountability and how it can support operational independence and enhance transparency, while safeguarding confidential, institution-specific information.
The Basel Committee continues to monitor the evolution of supervisory practices, in particular as they apply to global systemically important banks.
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