Bracing for Basel Changes

Dr. Nout Wellink, Chairman of the Basel Committee on Banking Supervision, delivered a speech earlier this week on the work planned by his committee to address reforms in the global banking system.  Based in Basel, Switzerland, the Basel Committee is part of the Bank for International Settlements which fosters international monetary and financial cooperation and serves as a bank for central banks across the globe.  Here is what Dr. Wellink had to say about the Committee's long-term initiatives: 

When it comes to the long term, we need to establish a clear target for the future regulatory system which substantially reduces both the probability and severity of a crisis like the one we currently are working though. By providing clarity about the future regulatory framework, we will help re-establish near term confidence, reduce the risk of competitive distortions and limit the degrees of uncertainty for the public and private sector. Also, by emphasising that these reforms will be phased in over an appropriate horizon, we reduce the risk that our own actions contribute to procyclicality in the system.

Let me now say a few words about the steps the Basel Committee has and will be undertaking to produce a more robust supervisory and regulatory framework for the banking sector. Such a framework needs to have four key components:

1. Strong regulatory capital,

2. Robust standards for bank liquidity,

3. Enhanced risk management, governance and supervision, and

4. Better transparency

Needless to say, major changes are needed and will be promulgated by organizations such as the Basel Committee.  Is your company ready to adjust to the coming changes?  Wheelhouse Advisors can help you prepare.  Visit www.WheelhouseAdvisors.com to learn more.