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Nout Wellink |
Last week, at the International Conference of Banking Supervisors in Mexico, bank supervisors from 120 countries endorsed the updated version of the Basel Core Principles for Effective Banking Supervision and its Methodology. The event focussed on ratifying the new principles as well as discussing the implementation of Basel II and the impact of global banks in domestic markets.
The Core Principles were originally agreed in 1997 as part of the global response from bank supervisors following the financial crises of the 1980's and 1990's. The 25 Principles are globally agreed minimum standards for banking regulation and supervision, covering a wide range of aspects including licensing, ownership of banks, bank capital adequacy, risk management, consolidated supervision, ways to deal with problematic situations in banks, and the division of tasks and responsibilities between home and host authorities. The Methodology, developed in 1999, provides further details and guidance to assist in the interpretation and assessment of the 25 Core Principles.
These Core Principles have been updated to make them more flexible so as to promote effective supervision of both advanced and less advanced banking systems through the refinement of the essential and additional criteria in the Methodology. In addition, cross-border and cross-sectoral trends and developments are reflected more comprehensively, as is the need for closer cooperation and information exchange between supervisors of different sectors and countries. The review also stresses the importance of the independence, accountability and transparency of bank supervisory authorities. The Core Principals were agreed by the attending supervisors who declared their continued support for the implementation of international minimum standards for bank supervision in all countries.
Speaking at the conference, the Chairman of the Basel Committee, Nout Wellink said "The Core Principles have for many years been a useful tool for countries, helping them to improve their banking supervision. The now completed update ensures that the Principles will remain current and relevant". Mr Nicholas Le Pan, the Vice Chairman of the Basel Committee, chaired a panel on international banks in domestic markets, and said that "enhanced communication and cooperation among supervisors are hugely important not only to the success of Basel II implementation, but also to how we supervise global banks most efficiently and effectively as banks and markets rapidly evolve.
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