About the Basel Committee
The Basel Committee on Banking Supervision provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. It seeks to do so by exchanging information on national supervisory issues, approaches and techniques, with a view to promoting common understanding. At times, the Committee uses this common understanding to develop guidelines and supervisory standards in areas where they are considered desirable. In this regard, the Committee is best known for its international standards on capital adequacy; the Core Principles for Effective Banking Supervision; and the Concordat on cross-border banking supervision.
The Committee's members come from Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, the United Kingdom and the United States. Countries are represented by their central bank and also by the authority with formal responsibility for the prudential supervision of banking business where this is not the central bank. The present Chairman of the Committee is Mr Nout Wellink, President of the Netherlands Bank.
The Committee encourages contacts and cooperation among its members and other banking supervisory authorities. It circulates to supervisors throughout the world both published and unpublished papers providing guidance on banking supervisory matters. Contacts have been further strengthened by an International Conference of Banking Supervisors (ICBS) which takes place every two years.
The Committee's Secretariat is located at the Bank for International Settlements in Basel, Switzerland, and is staffed mainly by professional supervisors on temporary secondment from member institutions. In addition to undertaking the secretarial work for the Committee and its many expert sub-committees, it stands ready to give advice to supervisory authorities in all countries. Mr Stefan Walter is the Secretary General of the Basel Committee.
Main Expert Sub-Committees
As of October 2006, the Committee has reorganised its work under four main sub-committees (organisation chart):
· The Accord Implementation Group
· The Policy Development Group
· The Accounting Task Force
· The International Liaison Group
More information on each sub-committee is provided below.
The Accord Implementation Group (AIG) was established to share information and thereby promote consistency in implementation of Basel II. While the AIG provides a forum for discussing members' approaches to implementing Basel II, it is not intended to mandate uniformity of application of the Revised Framework. It is chaired by Mr José María Roldán, Director General of Banking Regulation at the Bank of Spain.
Currently the AIG has three subgroups that share information and discuss specific issues related to Basel II implementation. The Validation Subgroup (AIGV) explores issues related to the validation of systems used to generate the ratings and parameters that serve as inputs into the internal ratings-based approaches to credit risk. The AIGV is chaired by Mr Maarten Gelderman, Head of Quantitative Risk Management at the Netherlands Bank.
The Operational Risk Subgroup (AIGOR) addresses issues related primarily to banks' implementation of advanced measurement approaches for operational risk. Mr Kevin Bailey, Deputy Comptroller, Office of the Comptroller of the Currency, United States, chairs the group.
The Trading Book Subgroup (AIGTB) is co-chaired by Ms Norah Barger, Associate Director, Board of Governors of the Federal Reserve System, United States, and Mr Thomas McGowan, Assistant Director, Securities and Exchange Commission, United States. It addresses issues regarding the implementation of the recommendations in the Committee's July 2005 paper, The application of Basel II to trading activities and the treatment of double default effects. A current focus of this group is the development of principles for the treatment of default risk in the trading book.
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The Policy Development Group (PDG) replaces the Committee's former Capital Task Force. Its primary objective is to support the Committee by identifying and reviewing emerging supervisory issues and, where appropriate, proposing and developing policies that promote a sound banking system and high supervisory standards. The group is chaired by Mr Stefan Walter, Secretary General of the Basel Committee.
Five working groups report to the PDG: the Risk Management and Modelling Group (RMMG), the Research Task Force (RTF), recently established working groups on Liquidity and on the Definition of Capital, and a Basel II Capital Monitoring Group.
The RMMG serves as the Committee's point of contact with the industry on the latest advances in risk measurement and management, and is chaired by Mr Klaas Knot, Director of Supervisory Policy at the Netherlands Bank
The Research Task Force serves as a forum for research economists from member institutions to exchange information and engage in research projects on supervisory and financial stability issues. It also acts as a mechanism for facilitating communication between economists at member institutions and in the academic sector. It is co-chaired by Mr Myron Kwast, Senior Associate Director of the Division of Research and Statistics at the Board of Governors of the Federal Reserve System, United States, and Mr Peter Praet, Executive Director at the National Bank of Belgium and member of the Management Committee of the Banking, Finance and Insurance Commission, Belgium.
The Liquidity Group will serve as a forum for information exchange on national approaches to liquidity risk regulation and supervision. This work is intended to provide the Committee with a stock-taking of existing regulatory and supervisory standards for liquidity risk management. The group is co-chaired by Mr Nigel Jenkinson, Executive Director for Financial Stability at the Bank of England, and Mr Gerhard Stahl, Head of the Risk Modelling Group at the German Federal Financial Supervisory Authority.
The Definition of Capital Group will explore emerging trends in eligible capital instruments in member jurisdictions. The group is co-chaired by Mr Yoshinori Nakata, Director of the Financial Systems and Bank Examination Department at the Bank of Japan, and Mr Paul Sharma, Head of the Prudential Standards Department at the Financial Services Authority, United Kingdom.
Lastly, in the course of implementation of Basel II, national supervisors are monitoring capital requirements to ensure that banks in their jurisdiction maintain a solid capital base throughout the economic cycle. The Basel Committee has established a Basel II Capital Monitoring Group that will from time to time share national experiences in monitoring capital requirements. This group is chaired by Mr Gerhard Hofmann, Head of the Banking and Financial Supervision Department at the Deutsche Bundesbank.
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The Accounting Task Force (ATF) works to ensure that international accounting and auditing standards and practices promote sound risk management at financial institutions, support market discipline through transparency, and reinforce the safety and soundness of the banking system. To fulfil this mission, the task force develops prudential reporting guidance and takes an active role in the development of international accounting and auditing standards. Ms Sylvie Mathérat, Director, Commission Bancaire, France, chairs the ATF.
Three working groups report to the ATF: the Conceptual Framework Issues Subgroup, the Financial Instruments Practices Subgroup, and the Audit Subgroup. The Conceptual Framework Issues Subgroup monitors and responds to the conceptual accounting framework project of the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board in the United States. The Subgroup is co-chaired by Mr Jerry Edwards, Senior Advisor on Accounting and Auditing Policy, Basel Committee ATF, and Mr Patrick Amis, Head of Accounting Affairs, Commission Bancaire, France.
The Financial Instruments Practices Subgroup examines implementation of international accounting standards related to financial instruments, and the links between accounting practices in this area and prudential supervision. The Subgroup is chaired by Mr Arthur Angulo, Senior Vice President in the Banking Supervision Group of the Federal Reserve Bank of New York, United States.
The Audit Subgroup promotes reliable financial information by exploring key audit issues from a banking supervision perspective. It focuses on responding to international audit standards-setting proposals, other issuances of the International Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants, and audit quality issues. The Subgroup is chaired by Mr Marc Pickeur, Advisor for Supervisory Policy at the Banking, Finance and Insurance Commission, Belgium.
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The newly established International Liaison Group (ILG) replaces the former Core Principles Liaison Group – which had focused considerably on the initial implementation and later revision of the 1997 Core Principles for Effective Banking Supervision – and provides a forum for deepening the Committee's engagement with supervisors around the world on a broader range of issues. It gathers senior representatives from eight Committee member countries (France, Germany, Italy, Japan, the Netherlands, Spain, the United Kingdom and the United States), 16 supervisory authorities that are not members of the Committee (Argentina, Australia, Brazil, Chile, China, the Czech Republic, Hong Kong, India, Korea, Mexico, Poland, Russia, Saudi Arabia, Singapore, South Africa, and the West African Monetary Union), the European Commission, the International Monetary Fund, the World Bank, and the Financial Stability Institute. The ILG is chaired by Mr Giovanni Carosio, Deputy General Director, Bank of Italy.
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Coordination with other standard setters
Formal channels for coordinating with supervisors of non-bank financial institutions include the Joint Forum, for which the Basel Committee Secretariat provides the secretariat function, and the Coordination Group. The Joint Forum was established in 1996 to address issues common to the banking, securities and insurance sectors, including the regulation of financial conglomerates. The Coordination Group is a senior group of supervisory standard setters comprising the Chairmen and Secretaries General of the Committee, the International Organization of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors (IAIS), as well as the Joint Forum Chairman and Secretariat. The Coordination Group meets twice annually to exchange views on the priorities and key issues of interest to supervisory standard setters. The position of chairman and the secretariat function for the Coordination Group rotate among the member representatives of the three standard setters every two years.