The Financial Stability Institute (FSI), together with the Association of Supervisors of Banks of the Americas (ASBA) and the Basel Committee on Banking Supervision (BCBS), held its 12th High-level Meeting. The meeting was hosted by the Central Bank of Paraguay and attended by about 50 participants representing various central banks, supervisory authorities and financial institutions in the region as well as senior officials from around the world. It was co-chaired by Mr Fernando Restoy, FSI Chairman, and Mr Juan Pedro Cantera, ASBA Chairman and Superintendent of Financial Services in Uruguay.
In his keynote address, Governor Carlos Gustavo Fernández Valdovinos of the Central Bank of Paraguay emphasised the importance for supervision to take into account the impact of the macroeconomic environment on banks. In this regard, he viewed the finalisation and implementation of Basel III as important because, among other things, it promotes macroprudential regulatory approaches that address the impact of economic fluctuations. However, he recognised that implementing Basel III in different jurisdictions with different levels of development would be challenging.
Similar issues were considered by participants in the various sessions. In the context of BCBS work, participants discussed updates on Basel III and exchanged views on effective ways to apply the proportionality principle in its implementation. They also discussed the potential challenges surrounding the issue of treatment of sovereign exposures under the Basel framework. Participants also touched on other regulatory and supervisory issues pertinent to the region such as the implementation of the expected credit loss provisioning framework, ensuring banks’ resilience to cyber-risk through regulation and supervision, addressing the de-risking challenge, the opportunities and risks of fintech, and achieving greater supervisory efficiency and effectiveness.
In his concluding remarks, Mr Cantera highlighted regional priorities, which include the issues of proportionality; fintech, including cyber-risk; and climate change in the Caribbean. Mr Restoy noted that the regulatory and supervisory community is still transitioning to and dealing with the challenges associated with the implementation of post-crisis regulatory reforms, while also trying to deal with new and complex challenges posed by a fast-changing financial system. It is therefore critical to continue exchanging experiences and approaches to better deal with all the issues. He emphasised that the FSI, under the guidance of its newly created Advisory Board, which includes Mr Cantera, will continue to work with its regional partners to foster this exchange and contribute to the identification and dissemination of sound supervisory practices.
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