On 6 July 2023, the Basel Committee on Banking Supervision (Basel Committee) published a consultive document on core principles for effective banking supervision (the Core Principles).

The Core Principles are the de facto minimum standards for the sound prudential regulation and supervision of banks and banking systems. They are universally applicable and accommodate a range of banking systems and a broad spectrum of banks.

In April 2022, the Basel Committee commenced a review of the Core Principles, with the objective of reflecting supervisory and regulatory developments, structural changes affecting the banking system, and lessons learnt from Financial Sector Assessment Programs.  

In this consultation, the Basel Committee is proposing to:

  • Improve the overall readability of the Core Principles by significantly streamlining the introductory sections and removing duplication where possible.
  • Revise the ‘Introduction to the Core Principles’ which outlines the general approach to using the Core Principles, how the concept of proportionality should be understood and applied, and describes the key themes and trends that have informed the current review. Other sections have been merged and re-ordered for a more logical flow. A new ‘explanation of terms’ sections has also been introduced, which provides explanations of certain terms and phrases used throughout.
  • Make minor adjustments to the contents of the ‘Assessment methodology’ (including the grading criteria) and ‘preconditions for effective banking supervision’.
  • Introduce a new annex to the Core Principles as a resource for supervisory authorities. It would be updated biennially, and would list the latest Basel Committee standards, guidelines and sound practices.

The deadline for responding to the consultative document is 6 October 2023.