Regulatory Outreach for Student Education

Engaging Students in the Debate Over Financial Services Reform

Today’s debate over regulatory reform is a watershed activity in the careers of financial industry professionals. Years ago, similar debates over mandated pre-funding of pension liabilities (ERISA) and the reunification of investment banking with commercial banking (Glass Steagall's repeal) changed the direction of financial market evolution. Opinions may differ on the merits of those changes, but no one disputes their significance.

Without question, college students and young professionals should be well-versed in the issues involved in today's debate. The Regulatory Outreach for Student Education (ROSE) program is the Center's way to give top students, tomorrow's business and finance leaders, opportunities to experience the financial regulatory process up-close.  The ROSE program is designed to put students in touch with the regulators, policy-makers, and industry leaders who are currently shaping the financial regulatory landscape.  We then challenge them to research and articulate their own positions on the most intriguing and interesting issues.  

ROSE Program Blog

Tuesday, May 2, 2017

Basel Sharpens Focus on Banking Supervision

Will also improve confidence in prudential ratios


Author: David Schwartz J.D. CPA

The Basel Committee on Banking Supervision has announced its work program themes for 2017 and 2018 to include a greater focus on strengthening supervision by member jurisdictions. In addition, the Committee still remains dedicated to its core goals of:

 

  • finalizing its existing policy initiatives; 
  • monitoring emerging risks;
  • assessing the effects of the Committee's post-crisis reforms; and 
  • ensuring full, timely, and consistent implementation of the Committee's standards.

 

Supervisory Powers

 

The Committee’s focus on supervisory powers over the next year will include improving supervisory tools and techniques by developing case studies and identifying best practices, where appropriate, in a number of key areas. Specifics about these key areas were not announced but will emerge over the course of the year. The Committee did, however, disclose that they will be making a deeper assessment of:

 

  • the varying supervisory actions taken under Pillar 2 in different jurisdictions;
  • stress testing practices; 
  • assessing the supervisory impact of the growth of financial technology; and 
  • sharing best practices on how supervisors are to assess expected credit loss provisioning practices for regulatory capital purposes.

 

Improving Ratios

 

As part of their effort to ensure timely and consistent application of Basel standards, the Committee will concentrate on improving confidence in prudential ratios. Key to this effort is completing the seven remaining RCAP assessments related to the Liquidity Coverage Ratio. So the Committee plans to make the RCAP process a priority. Following the completion of that effort, the Committee announced that they will commence reviews of the implementation of other standards, starting with the Net Stable Funding Ratio and Large Exposures framework, with the first reports discussed and published in 2018. The Committee said they will also review banks' implementation of the standard on interest rate risk in the banking book.

 

In addition, through its Basel Consultative Group, the Committee will discuss implementation challenges of the regulatory framework with a broad range of non-BCBS member jurisdictions from emerging market economies.

 

Details of the Committee’s work program themes are available via: http://www.bis.org/bcbs/bcbs_work.htm

 

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