On 31 October 2019, the Basel Committee on Banking Supervision (BCBS) issued a press release on the outcome of its Madrid meeting on 30-31 October 2019.

At its meeting, the BCBS considered, inter alia, initiatives relating to the following issues:

  • credit valuation adjustment (CVA) risk. The BCBS agreed to consult on a final set of limited and targeted adjustments to the CVA risk framework, with the expectation that these adjustments will be implemented on 1 January 2022 alongside the final Basel III standards;
  • disclosures. The BCBS plans to consult on revised disclosure requirements in relation to the market risk framework finalised in January 2019. It also plans to consult on voluntary disclosure templates, which relate to banks’ sovereign exposures. Jurisdictions would retain discretion on whether to implement such templates;
  • cryptoassets. The BCBS plans to publish a discussion paper on the prudential treatment of cryptoassets. The BCBS reaffirmed its view that the prudential treatment of these cryptoasset exposures should reflect the high degree of risk posed by cryptoassets;
  • anti-money laundering (AML) and counter-terrorist financing (CTF). The BCBS agreed to consult on guidelines on enhancing cooperation between prudential regulatory authorities and both AML and CTF authorities;
  • fintech. The BCBS agreed to publish a report on open banking and application programming interfaces. It will also conduct deep dive assessments relating to, inter alia, risk management challenges associated with the use of artificial intelligence, banks’ dependencies on unregulated third parties, and supervisory challenges related to data governance and management, data security, portability, and recovery; and
  • capital buffers. The BCBS considered the usability of capital buffers and has published a newsletter to emphasise the importance of the capital buffer framework and to highlight that buffers are designed to be usable. The newsletter reiterates the BCBS’ expectations on the consequences for banks that draw down on their buffers and supervisors’ discretion to impose time limits on banks operating within the buffer range.