As a creature of the G10, the Committee could originally lay claim to coverage of most of the world’s truly internationally active banks. But as banks and financial markets became increasingly integrated across national borders, this claim to be the standard setter for all internationally active banks became more and more difficult to justify. During the 1990s and 2000s, the Committee made good use of its Core Principles Liaison Group to seek advice from members outside the G10. The CPLG’s contribution was highly  2  BIS central bankers’ speeches  constructive when Basel II was developed, for example. But as the size and importance of jurisdictions “outside the tent” grew, even this arrangement became increasingly untenable. And so, in 2009, the Committee essentially stepped up from a G10 to a G20 foundation as it sought a truly coordinated response to the global financial crisis. Indeed, we now have more than 40 organisations representing 27 member jurisdictions around the table. As a result, the Committee’s coverage of global banking assets has gone from about 60% to 90%. This much greater inclusiveness lends, in turn, greater legitimacy and credibility to the Committee’s standards, as they are now set by a process that is truly reflective of international markets. The fourth key influence is a more recent one – the shift in thinking from a micro- to a macroprudential perspective. For much of its life, the Committee focused primarily on microprudential issues.
That is not to say the macroprudential angle was ignored, but there was certainly a view – quite prevalent in the pre-crisis world – that if banks were individually stable, the financial system would itself stay upright. During the Great Moderation, little appetite existed for new tools and international regulations of a macroprudential nature, even if the Committee could have foreseen all of the looming threats. The financial crisis brought home the lesson that financial stability could not be assured only through the use of microprudential tools. And so Basel III represents another important step in the Committee’s development. Basel III has substantially enhanced the microprudential framework. And, in the countercyclical buffer, it has also introduced the first international agreement on a macroprudential tool. Subsequent work on the framework for systemically important banks (both global and domestic) has further expanded the Committee’s input into this relatively new field – a trend that is unlikely to be reversed. My fifth key influence on the Committee’s evolution is also quite recent, and hence its eventual impact on the Committee’s work is still difficult to foresee: its role in monitoring the implementation of Committee standards. Post-crisis, the Committee has not only expanded its membership, but it has also taken on the role of monitoring the implementation of the standards agreed by its members.