15th BCBS-FSI high-level meeting for Africa on strengthening financial sector supervision and current regulatory priorities

Cape Town, South Africa, 30 and 31 January 2020

Senior central bankers and bank supervisors in sub-Saharan Africa gathered to discuss the global and regional developments in banking supervision, latest work on operational resilience of banks, cyber security, and supervisory challenges related to Pillar 2 implementation and the use of technology in supervision (suptech).

Technological developments and their impact on banks and bank supervisors were some of the main features of the 15th high-level meeting on strengthening financial sector supervision and current regulatory priorities, held on 30 and 31 January in Cape Town, South Africa. The meeting was hosted by the South African Reserve Bank (SARB), and jointly organised by the Basel Committee on Banking Supervision (BCBS) and the Bank for International Settlements' Financial Stability Institute (FSI).

SARB Governor Kganyago underlined the importance of the high-level meeting as an annual event bringing together representatives of the BCBS, FSI and sub-Saharan African central banks and supervisory authorities. He reminded participants of their responsibility to preserve a sound financial sector in Africa and highlighted the important role of proportionality when implementing international standards. He also called for "waking up to the challenge of climate risks" and pointed to the need to better understand their impact on the financial sector.

Participants shared their current supervisory priorities and agreed on the ongoing need to deal with capacity-building for the sub-Saharan region. The assessment of rules on anti-money laundering and countering the financing of terrorism, dealing with IT risks including cyber risk, and implementing global standards were among the most cited challenges.

The Basel III standards are a comprehensive and wide-ranging set of measures that seek to fix the many fault lines in the pre-crisis regulatory framework. But the benefits from these reforms can only be enjoyed if the standards are implemented by all Committee member jurisdictions consistently. The time for adaptation is passed, and the focus should now be on adoption. It is in the interest of all jurisdictions to lead by example and contribute to global financial stability by implementing Basel III in a full, timely and consistent manner.

Pablo Hernández de Cos, Chair of the Basel Committee on Banking Supervision and Governor of the Bank of Spain

The Chairman of the Basel Committee, Governor Hernández de Cos, emphasised the imperative of implementing the Basel Committee's post-crisis reforms. The benefits to global financial stability of Basel III can only be fully realised if these standards are implemented across jurisdictions in a full, timely and consistent manner. While good progress has been made to date in meeting this implementation imperative, there have recently been worrying signs of delays in implementing some of the outstanding Basel III standards among some member jurisdictions. Chairman Hernández de Cos noted that such delays and potential inconsistences are a result of two broad factors: (i) the unfortunate dynamics of the "regulatory cycle" and (ii) the significant volume and excessive complexity of some of the post-crisis reforms. Chairman Hernández de Cos called on all jurisdictions, particularly those with the biggest banking systems, to lead by example and contribute to global financial stability by implementing the Basel III standards in a full, timely and consistent manner. Finally, he also highlighted the role of proportionality in helping the implementation imperative. He underlined the Committee's support for the use of proportionality in implementing the Basel Framework in a manner consistent with the Core Principles, and emphasised that, going forward, 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.

It would be fatal to let financial markets off the leash again.

Felix Hufeld, President, Federal Financial Supervisory Authority (BaFin), Germany

During the high-level meeting, banking supervisors acknowledged common regulatory and supervisory challenges especially in relation to the technological innovation taking place in banking. The meeting wrapped up with two important areas in bank supervision. First, they explored how prudential authorities' supervisory frameworks and their methodologies under Pillar 2 of the Basel Framework have evolved in post-crisis years. Second, discussion centred on the use of technology for supervisors and whether and how suptech use cases can support and improve supervisory decision-making.