Core principles for effective banking supervision - revised version endorsed by global bank supervisors

Press release  | 
14 September 2012

Banking supervisors and central bankers representing more than 100 countries have today endorsed the Basel Committee's revised Core principles for effective banking supervision, the global standard for the sound prudential regulation and supervision of banks and banking systems.

Delegates met in Istanbul on 13-14 September 2012 for the 17th International Conference of Banking Supervisors, which was hosted by the Central Bank of the Republic of Turkey and the Turkish Banking Regulation and Supervision Agency. Drawing on lessons learnt during the financial crisis that began in 2007, the revised Core Principles represent a significant step forward from the Basel Committee's 2006 Core principles for effective banking supervision and the associated Core principles methodology. They also reflect key advances in regulatory thinking in recent years that, among other things, include:

  • devoting supervisory attention on a proportionate basis, in line with the risk profile and systemic importance of banks;
  • applying a broad financial system perspective that considers both the macro- and microprudential elements of effective supervision;
  • adopting effective crisis preparation and management strategies, together with orderly resolution frameworks and other measures to mitigate the impact of bank failures; and
  • fostering robust market discipline through sound supervisory practices in the areas of corporate governance, disclosure and transparency.

Conference participants fully supported the Basel Committee's commitment to achieving global implementation of the revised Core Principles.


Mr Stefan Ingves, Chairman of the Basel Committee on Banking Supervision and Governor of Sveriges Riksbank, noted that "supervisors and banks have made considerable strides in strengthening banks' risk management and supervisory practices since the onset of the crisis. Continued efforts by all countries to implement and comply with the Core Principles and robust assessment by the IMF and World Bank will result in further advances." Mr Ingves noted that publication of Financial Sector Assessment Program (FSAP) reports will lead to a better understanding of sound supervisory practices and will benefit countries' efforts to improve their supervisory systems. He added that this increased transparency will help countries to identify weaknesses that may hinder an effective system of banking supervision and to prioritise the necessary improvements.

Noting the Basel Committee's aim to promote the Core Principles as an international benchmark, Ms Sabine Lautenschläger, Deputy President of the Deutsche Bundesbank and co-chair of the Core Principles Group that developed the revised Core Principles, stated that "consistent with their underlying purpose, the revised Core Principles deliver simplicity and flexibility by being outcome-oriented and focusing on supervisors' primary objective of promoting the safety and soundness of banks and the banking system."

Ms Teo Swee Lian, Deputy Managing Director of the Monetary Authority of Singapore and co-chair of the Core Principles Group, further noted the conscious effort made to keep in sight the basic elements of sound supervision. She said that "while the latest revision breaks new ground in several areas to address post-crisis lessons and other significant developments, it also goes back to the roots of banking supervision in its emphasis on a more forward-looking perspective through early intervention and on applying a more effective risk-based approach to supervision."


The Basel Committee issued the original Core Principles in 1997 and revised them in October 2006. The latest revision was conducted jointly with the Basel Consultative Group, which comprises banking supervisors from both member and non-member countries of the Basel Committee, as well as regional groups of banking supervisors, the IMF, the World Bank and the Islamic Financial Services Board. Comments received from a public consultation also helped the Basel Committee to refine the final version of the Core Principles and to ensure that they remain inclusive and applicable to a wide range of jurisdictions.

Many countries have used the 2006 Core Principles and the associated methodology to strengthen their banking supervisory systems as part of the FSAP exercises conducted by the IMF and the World Bank. While the revised Core Principles will further contribute to promoting effective supervisory practices and fostering financial stability globally, the Basel Committee acknowledges that supervisory authorities may need to make their transition to the revised principles over time. The IMF and World Bank will take this into account, particularly for ongoing assessments based on the 2006 Core Principles, as countries move towards adopting the latest revisions in the near future.