Executive Summary
This report discusses the role of information in effective market discipline and effective banking supervision. It provides general guidance to banking supervisors and regulators as they formulate and improve regulatory frameworks for public disclosure and supervisory reporting, and to the banking industry on core disclosures that should be provided to the public.
The issuance of this paper is based on the recognition that markets contain disciplinary mechanisms that can reinforce the efforts of supervisors by rewarding banks that manage risk effectively and penalising those whose risk management is inept or imprudent. Market discipline, however, can only work if market participants have access to timely and reliable information which enables them to assess a bank's activities and the risks inherent in those activities. Improved public disclosure strengthens market participants' ability to encourage safe and sound banking practices.