The Basel Committee on Banking Supervision convened in November 2024 to address critical developments in global banking regulation and risk management. Their meeting centered on several key strategic areas that have significant implications for the international financial system.
A primary focus was the unanimous reaffirmation of implementing Basel III, a comprehensive regulatory framework designed to strengthen bank capital requirements, improve risk management, and enhance financial stability. The committee emphasized the importance of full, consistent, and timely implementation, echoing a recent commitment by G20 Finance Ministers and Central Bank Governors.
The discussion extensively explored the complex relationship between banks and non-bank financial intermediation (NBFI), a sector experiencing rapid growth and evolution. The committee recognized potential risks and vulnerabilities emerging from these interconnections. They highlighted the critical need for banks and supervisors to remain vigilant, particularly given existing data limitations that make comprehensive risk assessment challenging.
A significant outcome of the meeting was the finalization of guidelines for counterparty credit risk management. These guidelines aim to address weaknesses exposed during recent episodes of financial market distress, representing a proactive approach to preventing similar vulnerabilities in the future.
The committee also reflected on the banking turmoil of 2023, using those experiences to develop practical supervisory tools. Their ongoing work focuses on improving supervision of liquidity risk, interest rate risk, and assessing the sustainability of banks’ business models. An updated report on these efforts is anticipated in early 2025.
Macroprudential policy discussions centered on jurisdictions’ approaches to setting countercyclical capital buffers. The committee supports the concept of a “cycle-neutral” rate and plans to publish a report documenting existing practices to guide other jurisdictions.
Climate-related financial risks remained on the agenda, with the committee continuing to develop a Pillar 3 disclosure framework. They expect to finalize this framework in the first half of 2025, signaling a growing recognition of environmental factors in financial risk assessment.
Through these comprehensive discussions and strategic initiatives, the Basel Committee demonstrated its commitment to enhancing global banking resilience, risk management, and regulatory effectiveness.
The Press Release can be read there.
