BCBS – approved annual G-SIBs assessment, and updated workplan to evaluate reforms

September 25, 2020

Covid-19 Risks

BCBS met on September 14, 18, and 25, 2020, to take stock of Covid-19 risks to the global banking system and related vulnerabilities, and to discuss a range of policy initiatives. They noted that the outlook for global financial stability continues to be uncertain. Factors that could heighten risks include the trajectory of Covid-19 infections, containment measures, a protracted recovery period, and the unwinding of support measures.

Operational Resilience

Operational resilience will continue to be tested in light of an increase in remote working, as well as increased banks’ reliance on technology, and of third-party service providers. Against that backdrop, the global banking system entered the crisis on a more resilient footing. Thanks in part to the Basel III post-crisis reforms, bank capital and liquidity resources are greater than during the crisis of 2007-09, making them more resilient to crises. The committee is also consulting on a set of principles to enhance resilience.

Basel III

BCBS reaffirmed the expectation of full timely consistent implementation of Basel III. Committee reiterated its previous guidance that banks should make use of the Basel III capital and liquidity buffers during this crisis to absorb financial shocks after COVID. Aims to support the real economy by lending to creditworthy households and businesses. Supervisors will allow banks sufficient time to restore their buffers, taking account of economic and market conditions as well as the circumstances of individual banks. Committee will continue to monitor risks to the global banking system from Covid-19. Coordinate work on cross-sectoral issues with FSB and global standard-setting bodies.

G-SIBs

Basel committee approved the results of the annual assessment exercise for G-SIBs. The results will be submitted to the FSB before it publishes the 2020 list of G-SIBs.

Workplan

Approved workplan to evaluate its post-crisis reforms, with lessons from the COVID crisis. Will conduct analyses to evaluate the extent that post-crisis reforms achieved objectives, review interactions of Basel III with post-crisis reforms, and any gaps or unintended effects.

For more information, visit www.bis.org



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