Basel Committee on Banking Services (BCBS)

BCBS Publishes Progress Report on Implementation of Basel Regulatory Framework

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On May 7, the Basel Committee on Banking Supervision (BCBS) published its sixteenth progress report on BCBS members’ implementation of Basel III. The report can be found here.

The report, which looks at implementation as of the end of March 2019, focuses on the status of adoption of the Basel III standards to ensure they are transformed into national law or regulation in accordance with agreed timeframes. The Basel III standards reviewed include: risk-based capital standards, the leverage ratio, the standards for global and domestic systemically important banks and interest rate risk in the banking book, the net stable funding ratio (NSFR), the large exposures framework and the disclosure requirements.

The report states that since BCBS’s previous report, published in October 2018, member jurisdictions have made progress in implementing standards for which deadlines have already passed, including those relating to the revised securitization framework. However, progress has been limited in the implementation of other standards which have yet to be finalized and put into effect in a number of jurisdictions, including the NSFR, which took effect on January 1, 2018, but only 11 jurisdictions have final rules in place.

BCBS Consults on the Implications of FinTech for Banks and Supervisors

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The Basel Committee on Banking Supervision (“BCBS“) published a consultative document (BCBS415) on the implications of FinTech for banks and their supervisors.

The BCBS set up a task force to assess how FinTech will affect the banking industry and their supervisors in the near to medium term. The consultative document focuses on future potential scenarios together with the specific risks and opportunities these may bring.

The consultative document also includes case studies on big data, cloud computing and distributed ledger technology as well as case studies on three FinTech business models (neo-banks, payment services and lending platforms).

The BCBS identified key observations and recommendations on supervisory issues to be considered by banks and bank supervisors in the light of the emergence of new FinTech business models and the rapid adoption of enabling technologies. These include the following:

  • The opportunities for supervisors to use innovative technologies;
  • Principal risks for banks resulting from FinTech developments, including cyber, compliance and operational risks;
  • Implications for the increasing use of third parties by banks via outsourcing and/or partnership arrangements; and
  • The need to ensure high compliance standards and safety without limiting innovation in the banking sector.

Comments can be made on the consultative document until October 31, 2017.