The Hindu Business Line : Basel panel working on risk management

New Delhi, Oct 11 The Basel Committee on Banking Supervision is confident that its ongoing initiatives would help address the types of issues and risks arising from the recent financial market turbulence.

In a statement issued at the conclusion of its 8-9 October meeting, the committee has said that it continues to assess the supervisory and risk management issues arising from recent financial market developments and, where appropriate, would consider supervisory responses that are pragmatic and proportionate.

Basel II implementation

Meanwhile, the Chairman of the Basel Committee on Banking Supervision, Mr Nout Wellink, who is also the President of the Netherlands Bank, has underscored the importance of implementing the Basel II capital framework , strengthening supervision and risk management practices in areas like liquidity risk, and improving the robustness of valuation practices and market transparency for complex and less liquid products.

The Basel committee members have agreed that Basel-II implementation would help make the capital base more relevant to banks’ changing risk profiles and that the committee would closely monitor its impact.

This framework is also expected to create incentives for better risk measurement and management, including for securitisation exposures and liquidity lines for asset-backed commercial paper programmes.

New standards

The Basel Committee on Banking Supervision has been working to introduce new standards for banks to hold capital against the default risk associated with complex, less liquid credit product in the trading book.

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