Global banking regulators are proposing changes to the basic principles that guide their oversight of banks’ credit risk management.
The Basel Committee on Banking Supervision launched a public consultation Wednesday on proposed revisions to the credit risk principles that were first adopted back in 2000. The revisions provide guidance to regulators on supervising banks’ credit risk management processes — including their processes for granting, administering and monitoring the provision of credit, along with their risk controls.
The proposed update to these principles follows a review carried out by the Basel Committee in 2023, which determined that certain aspects of the guidance have become obsolete, redundant, or not aligned with the latest version of the global capital rules.
As a result, it’s proposing changes to cut outdated provisions of the guidance, and revise certain principles to more closely align with the prevailing Basel III capital regime. It does not extend the guidance to new areas.
Comments on the proposed changes are due March 21.
In the meantime, the group that oversees the Basel Committee — the Group of Central Bank Governors and Heads of Supervision (GHOS) — endorsed the committee’s planned work program and strategic priorities for the year ahead.
That work includes focusing on the final implementation of the Basel III regime — a task that has increasingly run into resistance from regulators in various markets, amid competitive concerns — which has prompted assorted delays and deferrals in the adoption of certain requirements from regulators in the U.S., Canada and Europe.
Against that backdrop, in a release, Tiff Macklem, chair of the GHOS and governor of the Bank of Canada, said that the members of the GHOS “unanimously reaffirmed their commitment to implement Basel III in full and consistently to ensure a global level playing field and to promote the resilience of the global banking system.”
Along with its work on the implementation of final Basel III rules, the Basel Committee also intends to work on possible policy responses stemming from the banking turmoil that arose in March 2023, resulting in the failure of several large banks in the U.S. and Europe — along with issues related to financial sector liquidity, and the implications of the increased digitalization of finance.
Additionally, the GHOS said that it plans to review the Committee’s work on climate-related financial risks later this year.
“By promoting global cooperation and pursuing a forward-looking approach to mitigating emerging risks and vulnerabilities affecting the global banking system, the Committee’s 2025-26 work programme seeks to further strengthen the regulation, supervision and practices of banks worldwide, promote global financial stability and support long-term economic growth,” said Erik Thedéen, chair of the Basel Committee and governor of Sveriges Riksbank.