The Basel Committee publishes its priorities for 2021/2022

On 16th April 2021, the Basel Committee on Banking Supervision published its work programme and strategic priorities for a two-year time span, covering 2021 and 2022. For all markets, the COVID-19 pandemic has been a game-changer, and the outlined priorities are no exception, with the overall focus on three key areas:

COVID-19 resilience and recovery:

In light of the crisis bought by the pandemic, the top priority for the two-year phase shall remain to monitor and identify risks to the global banking system, as well as taking steps in mitigating them through regulatory and supervisory measures to support the resilience of the banking system and its recovery.


 

Horizon scanning and mitigation of risks:

Adopting a forward-looking approach to the global trends that influence every space of financial markets, with the goal to keep pace with the impact of digitalisation and disintermediation of finance regarding the banking sector’s business models. The focus will also be on measuring and mitigating climate-related financial risks in all areas.  


 

Strengthening supervisory coordination and practices:

In encompassing the influence of new technologies, the Committee’s work will also include strengthening supervisory coordination in using SupTech, AI and machine learning to enhance both banking and supervision processes. The key areas of focus also include governance of data and technology by banks and operational resilience.

Key takeaways on Basel III implementation:

  • The Basel Committee will conduct an evaluation of “lessons learned” from the COVID-19 crisis regarding Basel III standards, with a report due in the summer of 2021, incorporated into the Financial Stability Board’s (FSB) interim and final reports to the G20;
  • Monitoring full and timely introduction of the Basel III framework;
  • Evaluating the effectiveness of the Basel III standards, encompassing both the influence of the COVID-19 pandemic and findings of the past decade.

The full report can be read here: https://www.bis.org/bcbs/bcbs_work.htm