The Basel Committee for Banking Supervision plans to agree on a regulatory framework governing banks’ exposure to cryptocurrencies, according to its program for 2021 and 2022, released this Friday.
Between this year and next, the panel plans to finalize “current efforts related to risk reduction and structural trends, such as the prudent conduct of banks’ disclosures for crypto assets.”
Like other regulators and central banks in different countries, the Basel Committee classifies cryptocurrencies as cryptocurrencies because, in its view, they do not meet the requirements and functions that should be considered cash.
The regulatory framework also sets out information requirements for banks regarding market risk and sovereign disclosures.
This initiative is one of three lines that the Group has set for itself over these two years: identifying, assessing and mitigating risks and vulnerabilities in the banking system. In addition to cryptocurrencies, the company will monitor other risks such as digitalisation and financial disruption, climate change and the impact of the long-term low interest rate environment.
The Committee stressed that all necessary work would be carried out in the next two years to systematically implement the Basel III regulatory framework.
“It is important that all jurisdictions implement the current Basel III standards consistently, timely and fully. Our strategic priorities are ambitious and ensure that the Group continues to improve global financial stability and safeguard the security and safety of assets.” Hernandez de Gauss insisted.
The second tier work of the Basel Committee is the economic recovery from the recession and crisis against Govt-19. Thus, the risks and vulnerabilities posed by the epidemic will be monitored and evaluated and, if necessary, new regulatory responses will be developed and used to support the banking system and mitigate the risks.
In this context, the panel said it would monitor the implementation and gradual reduction of measures taken by various countries to support banks. It also points out that it prepares a report containing “lessons learned” in relation to the Basel III standards. This document will be finalized in the summer of 2021 and will form part of the report that the Financial Stability Board will send to the G20.
The third tier of tasks for 2021-2022 is to “strengthen” coordination and oversight practices between different organizations. Key areas for time include the use of artificial intelligence in the monitoring process, banks’ data and technology management and monitoring approaches to operational regression, especially in the area of cyber security.
The Basel Committee for Bank Supervision has released its program and priorities for this year and next, which will continue to focus on the crisis that triggered the Govt-19 epidemic.
The Basel Committee for Banking Oversight, chaired by the Governor of the Bank of Spain, Pablo Hernandez de Gauss, will pursue “the implementation and promotion of national measures approved by member states during epidemics,” according to the plan.
These measures should be identical to the application of the Basel III regulation.
In parallel, the team evaluates “lessons learned” from the COVID-19 crisis with the Basel III standard.
In the summer of 2021, it will complete a report on this, followed by updates.
The panel’s decisions will be part of the G20’s Financial Stability Council report.
The panel will also examine the impact of digitization and financial collapse on the business models of banks and the banking system in general.
It will also assess measures to mitigate weather-related issues and the impact of long-term low interest rates on banks.