Basel Committee Announces Strategy to Address Banking Crisis Lessons
The Basel Committee on Banking Supervision has announced a comprehensive strategy to address the fundamental weaknesses revealed by the financial market crisis related to the regulation, supervision and risk management of internationally active banks.
Nout Wellink, Chairman of the Basel Committee, said that “the Basel Committee’s work programme is well advanced and provides practical responses to the financial stability concerns raised by policy makers related to the banking sector.”
Wellink added that “the primary objective of the Committee’s strategy is to strengthen capital buffers and help contain leverage in the banking system arising from both on- and off-balance sheet activities.” It will also promote stronger risk management and governance practices to limit risk concentrations at banks. “Ultimately, our goal is to help ensure that the banking sector serves its traditional role as a shock absorber to the financial system, rather than an amplifier of risk between the financial sector and the real economy,” Wellink said.
The key building blocks of the Committee’s strategy are: