Definition of the Basel Committee on Banking Supervision

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What is the Basel Committee on Banking Supervision?

The Basel Committee on Banking Supervision (BCBS) is a global committee designed to develop banking regulatory requirements. In 2022, it is composed of central banks and various banking regulatory authorities from 28 jurisdictions and has 45 members.

Key points to remember

  • The Basel Committee is the product of central banks in 28 jurisdictions.
  • The Basel Committee on Banking Supervision has 45 members.
  • The BCBS contains influential hedging suggestions called the Basel Accords.

Understanding the Basel Committee on Banking Supervision

The Basel Committee on Banking Supervision was created in 1974 by central bankers from the G10 countries, who were currently working to build new global monetary constructions to replace the recently collapsed Bretton Woods system. The seat of the committee is located in the workplaces of the Financial Institution for Global Settlements (BIS) in Basel, Switzerland. International member locations include Australia, Argentina, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Indonesia, Italy, Japan , Korea, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, South Africa and Spain. , Sweden, Switzerland, Turkey, the United Kingdom and the United States.

The BCBS was designed to deal with the problems introduced by the globalization of money and banking markets at a time when banking regulation remains largely beyond the competence of national regulators. Primarily, the BCBS serves to help our national banking and money market supervisory bodies move towards a more unified and globalized regulatory point-setting strategy.

Shaped and not based on a founding treaty, the BCBS will not be a multilateral group. As an alternative, the Basel Committee on Banking Supervision seeks to provide a discussion forum in which banking regulators and supervisors can cooperate to strengthen the level of banking supervision worldwide and improve understanding of vital points at the global level. within the sphere of banking supervision.

Basel Accords

The BCBS has developed a series of extremely influential hedging suggestions called the Basel Accords. These do not have to be binding and must be adopted by national policy makers in order to be enforceable, but they have generally shaped the idea of ​​banks’ capital needs in the countries represented by the committee and in the past.

The first Basel Accords, or Basel I, were finalized in 1988 and implemented in G10 countries, at least to some extent, in 1992. printed urged minimum capital requirements to maintain bank solvency in case of monetary stress. Basel I was adopted by Basel II in 2004, which was about to be executed during the financial disaster of 2008.

Basel III attempted to correct miscalculations of risk that would have contributed to the disaster by forcing banks to carry larger percentages of their assets in other liquid forms and fund themselves using more equity, rather than the debt. It was originally agreed in 2011 and was to be executed by 2015, but as of December 2017 negotiations were still ongoing on a few contentious points. One is the extent to which banks’ personal assessments of the danger of their assets may differ from those of regulators; France and Germany would like a reduction in the “production floor”, which could tolerate larger discrepancies between the assessment of the danger by banks and regulators. The United States needs the field to be bigger.

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