The Basel Committee's work programme

Finalise existing policy initiatives and initiate targeted policy development

The completion of Basel III in December 2017, followed by the finalisation of the revisions to the market risk framework in January 2019, represents an important milestone for the Committee's post-crisis policy development agenda. 

There now remains only a targeted set of policy initiatives that require finalisation. This includes work related to potential longer-term measures in response to expected credit loss accounting changes, the leverage ratio treatment of client cleared derivatives and measures to curtail window-dressing behaviour, efforts to enhance operational resilience, and potential policy measures related to crypto-assets. 

Regarding potential new policy initiatives, the Committee will consider in 2019 whether to pursue work on three additional issues. First, the ongoing efforts to reform benchmark rates could raise a number of transitional and steady state prudential and supervisory risks for banks (eg valuation-related risks, basis risk, operational concerns with banks' models, and the initial liquidity of instruments referencing new rates). The Committee will consider the implications of these risks for the banking system. 

Second, the Committee's current work programme states that the Committee will monitor and take note of the work of the Network for Greening the Financial System (NGFS). Accordingly, the Committee will discuss the progress report of the NGFS technical workstreams, following its planned publication in April 2019. 

Third, the Committee will continue to exchange views on the role of proportionality in the Basel framework, and whether any additional work is needed at the global level.

Evaluating and monitoring the impact of post-crisis reforms, and assessing emerging risks

The Committee will be devoting increasingly more time to evaluating and monitoring the impact of its reforms, and assessing emerging risks. To that end, the Committee approved a comprehensive and ambitious evaluation work programme in December 2017 and agreed to an initial set of evaluation topics. 

These evaluations assess the effectiveness of individual standards, the interactions and coherence among standards, and the broader macroeconomic impact of the Committee's post-crisis reforms. Detailed work plans for some of these evaluations had already been submitted to the Committee for review and approval in 2018, with several other work plans scheduled for discussion by the Committee in 2019. This evaluation framework has been extended to encompass the Committee's macroprudential standards, including the countercyclical capital and systemically-important banks buffer frameworks. The Committee has already completed two evaluations related to the usability of capital buffers and the interactions between the going- and gone-concern capital frameworks. 

The Committee will also continue to be involved with the evaluations coordinated by the Financial Stability Board. This includes the evaluations of (i) the leverage ratio treatment of initial margin and its impact on client clearing, (ii) the impact of post-crisis reforms on financial intermediation and (iii) the impact of reforms in ending "too-big-to-fail". 

In addition, the Committee will continue to monitor and assess emerging risks, including banks' behavioural responses. This includes an annual exercise related to potential regulatory arbitrage transactions and balance sheet optimisation techniques as well as potential supervisory responses where necessary. 

While the aim of the Committee's evaluation and monitoring work is not to explicitly revise the Committee's standards, the empirically-driven results of this work may result in additional policy issues for consideration in the future.

Promoting strong supervision

The Committee will continue to promote strong supervision and will renew its traditional focus on bank supervision. In 2019, the risks emerging from financial technology and the consequent impact on supervisory and regulatory strategies will be monitored and assessed. The ongoing work related to enhancing banks' operational resilience will include a review of existing Committee documents on this topic, with a view to publishing an updated set of guidance/standards in addition to a survey on supervisory metrics for measuring operational resilience. The Committee will also develop guidelines to enhance cooperation among prudential regulatory, anti-money laundering and investigative authorities. 

The Committee will continue to exchange views, practices and emerging issues on the implementation of Pillar 2. It will also continue to monitor the implementation of the interest rate risk in the banking book standard, and the Principles for effective risk data aggregation and risk reporting. The Committee will undertake a survey on the adoption of the Principles for effective supervisory colleges and exchange views on supervisory college agendas.

Ensuring full, timely and consistent implementation

It is of utmost importance that Committee jurisdictions seek to deliver on the G20 Leaders' repeated commitment for full, timely and consistent implementation of post-crisis reforms. Accordingly, the Committee will continue its Regulatory Consistency Assessment Programme in 2019, with a focus on the implementation of the net stable funding ratio and large exposure standards. The Committee expects to complete the assessments for most member jurisdictions by the end of 2020. 

The Committee will further investigate potential challenges in implementing its post-crisis reforms in a timely manner. Toward that end, it recently agreed to a set of guidelines to promote the implementation timeliness of future standards; the Committee's working groups will place more weight on ensuring that future standards are designed in a way that facilitate their timely implementation.