D.he central banks and financial supervisory authorities gathered in the Basel Committee are still ready to give the banks more legroom to deal with the Corona crisis. This is what the supervisory body of the Basel Committee on Banking Supervision said after its meeting on Monday. The central bank governors and heads of the national supervisory authorities want to prevent the supervisory rules for banks from being fragmented in the wake of the pandemic.
“Global cooperation and coordination among central banks and supervisory authorities have been key to maintaining financial stability around the world during the Covid-19 pandemic and beyond,” said France’s central bank chief François Villeroy de Galhau, who heads the GHOS supervisory body of the Basel Committee . The GHOS will work to ensure uniform rules of the game for the industry and to avert fragmentation of the regulations.
The members of the supervisory body had agreed to implement all aspects of the new international supervisory rules for banks (“Basel III”) completely, promptly and consistently. Because with these stricter capital and liquidity rules, the banks are strengthening their buffers, which means that they are better armed against future crises. Due to the pandemic, some regulations have been postponed by a year. The Basel Committee should keep an eye on the vulnerability of the banking system in the corona crisis.
For the time being, banks can continue to use the flexibility built into the Basel III regulations. However, the leeway in the use of the capital buffers set up specifically for crises should be reduced as soon as possible as soon as the crisis is over. This could be initiated in a coordinated manner.