Basel Committee Publishes More Details on Global Systemically Important Banks
November 26, 2024
The Basel Committee on Banking Supervision (BCBS) has published a consultation document on a revised framework for identifying and supervising global systemically important banks (G-SIBs). The framework is designed to ensure that G-SIBs are subject to enhanced supervision and regulation, commensurate with the risks they pose to the financial system.
The revised framework includes a number of new elements, including:
- A revised definition of G-SIBs, which is based on a combination of size, interconnectedness, and substitutability.
- A new set of quantitative indicators for identifying G-SIBs.
- A new framework for assessing the systemic importance of G-SIBs.
- A new set of supervisory measures for G-SIBs, which include higher capital requirements, more stringent liquidity requirements, and enhanced risk management practices.
The BCBS is seeking comments on the consultation document by February 28, 2025. The final framework is expected to be published in 2026.
The revised framework is part of the BCBS’s ongoing work to strengthen the resilience of the global financial system. The BCBS believes that the new framework will help to ensure that G-SIBs are subject to appropriate supervision and regulation, and that the financial system is more resilient to shocks.
Key Findings
- The BCBS has identified 30 G-SIBs, based on the new definition and indicators.
- The new framework will require G-SIBs to hold higher levels of capital and liquidity.
- The new framework will also require G-SIBs to implement enhanced risk management practices.
Implications
The revised framework will have a number of implications for G-SIBs, including:
- Increased costs of regulation and compliance.
- Reduced profitability.
- Reduced risk-taking capacity.
The new framework is likely to have a positive impact on the financial system by reducing the risks posed by G-SIBs.
Additional Information
The BCBS consultation document on the revised framework for G-SIBs can be found here:
www.bis.org/bcbs/publ/d520.htm
Basel Committee publishes more details on global systemically important banks
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