The Basel Process refers to the role of the BIS in hosting and supporting the work of the international secretariats engaged in standard setting and the pursuit of financial stability. Co-location at the BIS facilitates communication and collaboration among these groups as well as their interaction with central bank Governors and other senior officials in the context of the BIS's regular meetings programme. The BIS also supports the work of these committees and associations with its expertise in economic research and its practical experience in banking.
The Basel Process is based on three key features: in addition to the synergies of co-location mentioned above, these are flexibility and openness in the exchange of information, and support from BIS expertise in the field of economics, banking and regulation.
Synergies. The BIS hosts the secretariats of nine groups that contribute to the pursuit of financial stability.
These groups have their own respective governance arrangements and reporting lines.
Various groupings of central banks and supervisory authorities set the agendas of the following six groups:
- The Basel Committee on Banking Supervision (BCBS): the global standard setter for the prudential regulation of banks that provides a forum for cooperation on banking supervisory matters. Its mandate is to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability.
- The Committee on the Global Financial System (CGFS): monitors and analyses the broad issues relating to financial markets and systems.
- The Committee on Payments and Market Infrastructures (CPMI): analyses and sets standards for payment, clearing and settlement infrastructures.
- The Markets Committee: examines the functioning of financial markets.
- The Central Bank Governance Forum: comprises the Central Bank Governance Network, which facilitates the exchange of information on institutional arrangements and the Central Bank Governance Group, which discusses issues related to the design and operation of central banks.
- The Irving Fisher Committee on Central Bank Statistics (IFC): addresses statistical issues of concern to central banks, including those relating to economic, monetary and financial stability.
In addition, the BIS hosts three groups that have their own legal personality:
- the Financial Stability Board (FSB);
- the International Association of Deposit Insurers (IADI); and
- the International Association of Insurance Supervisors (IAIS).
The physical proximity of these different groups at the BIS creates synergies that, regardless of the variation in governance arrangements, produce a broad and fruitful exchange of ideas.
Flexibility. The limited size of these groups is conducive to flexibility and openness in the exchange of information, thereby facilitating coordination and preventing overlaps and gaps in their work programmes. At the same time, their output is much larger than their limited size would suggest, as they are able to leverage the expertise of the international community of central bankers, financial regulators and supervisors, and other international and national public authorities.
Supportive BIS expertise and experience. The work of the Basel-based committees is informed by the BIS's economic research and, where appropriate, by the practical experience it gains from the implementation of regulatory standards and financial controls in its banking activities.
The work of the groups that are part of the Basel Process is shared more widely through various channels.
The Bank's own Financial Stability Institute (FSI) facilitates the dissemination of the standard-setting bodies' work to central banks and financial sector supervisory and regulatory agencies through its extensive programme of meetings, seminars and online tutorials.
The outcomes of the Basel Process are also visible to the public in the form of committee reports that analyse specific topics and, as regards the work of the standard-setting committees, in the form of internationally agreed standards. International agreement is the precondition for globally consistent standards. But it does not substitute for national legislation. In order to become binding, the agreements reached in Basel have to be approved and implemented at the national level, following due regulatory and legislative processes in each individual jurisdiction.