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Basel Committee to review recent market developments, advances work on climate-related financial risks, and reviews Basel Core Principles

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Authored by: Simon Deane and Ruby Hui

The Basel Committee on Banking Supervision (“Basel Committee”) reviewed recent market developments in and risks to the global banking system, and discussed possible policies and supervisory initiatives in March.

Under the impact of current economic and financial market conditions such as risks of high inflation, lower growth and geopolitical tensions, the global banking system is facing different challenges. Such conditions only emphasise the importance of implementing all aspects of the Basel III framework in a full and consistent manner.

Also, the Basel Committee discussed the development of a Pillar 3 disclosure framework for climate-related financial risks. This framework aims to provide additional bank disclosures about the prudential risks. A consultation paper on the proposed framework will be published by the end of this year.

Further, the Basel Committee updated its review of both the structure and content of its core principles for effective banking supervision (“Basel Core Principles”). It agreed to consult on revisions to the Basel Core Principles by mid-2023.

After the publication relating to banks’ exposures to cryptoassets by the Basel Committee in 2022, the committee approved a work plan for continuous assessment and mitigation of the risks of cryptoassets to the global banking system, which includes the treatment of permissionless blockchains and the eligibility criteria for “Group 1” stablecoins.

For more information, please see the press release of the Committee here.

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Simon Deane

Consultant | Banking and Finance

Email or call +852 2825 9209

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