The Basel Committee on Banking Supervision develops recommendations to improve banking standards and regulations globally. It was established in 1974 after a German bank crisis. The organization meets four times a year in Switzerland and has four groups focusing on different topics. It provides outreach and education to non-member countries and aims to create a level playing field in the international financial community.
The Basel Committee on Banking Supervision is an international organization that develops recommendations to improve banking standards and regulations with the aim of creating a level playing field across the international financial community. It includes representatives from several nations and is part of the Joint Forum, a group of agencies charged with improving supervision and standards for the financial industry worldwide.
The inspiration for establishing the Basel Committee on Banking Supervision came in 1974, when a German bank experienced a financial crisis, which led regulators to move to close it. The bank’s pending payments to banks in the United States had not been completed by the time it closed due to the time difference, leading American banks to protest. The need for international oversight with a focus on cases involving multiple jurisdictions became apparent, and financial officials worked to create the Basel Committee on Banking Supervision.
Basel Committee members meet four times a year in Switzerland to discuss urgent issues. The organization is not regulatory in nature and does not have the ability to pass, implement or enforce the law. It can, however, make recommendations. Using input from member countries, it attempts to develop reasonable standards to address a variety of needs and concerns. These can include anything from recommendations on reserve requirements to international bank dispute processing guidelines. It makes periodic publications with specific recommendations available to the public and the global financial community.
Four groups within the Basel Committee on Banking Supervision focus on different topics of interest. The standards implementation, Basel consultation and policy development groups include representatives from several countries, as does the Accounting Task Force. These groups identify emerging concerns, work on creating a policy framework to help nations pass and enforce better financial regulations, and monitor ongoing issues to determine if further action is needed.
Countries that are not members of the Basel Committee on Banking Supervision can still access information through the organization and can choose to adopt recommendations that appear to suit their needs. The group also provides outreach and education, working with financial representatives from non-member countries to assist them with political concerns and other issues. This organization works to strengthen the global economy, increase consumer and investor confidence, and eliminate unfair advantages created by mismatched regulations, such as different reserve requirements in various countries that could lead financial institutions to preferentially do business in the region with lower requirements.
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