Enhancing the practical implementation of macroprudential supervision The systemically important bank – “SIB” – regimes will continue to be a priority area for the Committee over the coming years. Although the regimes for global SIBs and domestic SIBs have now been published, both will require a certain amount of ongoing maintenance and monitoring. Furthermore, as noted in the G-SIB standard, the methodology, including the indicator-based measurement approach itself and the cutoff/threshold scores, will be subject to periodic review and refinement every three years. Beyond this work, the Committee will now turn its attention to the practical implementation of tools and techniques to deal with systemic risks. This will include two complementary areas of work: •  Regulatory consequences of SIB classification: Being a SIB means more than just higher capital. In light of the risks they impose on the financial system, SIBs must be held to a higher standard with respect to supervisory expectations for risk management functions, data aggregation capabilities, risk governance and internal controls, all of which are topics that feature prominently in the Committee’s work plan. In addition, given the principles-based nature of the D-SIB framework, the Committee will monitor emerging practice as banking supervisors move towards implementation so as to facilitate cross-border cooperation and mutual understanding.
•  Use of microprudential tools for macroprudential purposes: The Committee will oversee preparations for the countercyclical buffer, as well as exchange information on the wider range of microprudential tools that have been used for macroprudential purposes (eg sectoral adjustments to risk weights, stress testing requirements, loanto-value limits or varying margin requirements). Concluding remarks Since the financial crisis, the Basel Committee has accomplished a great deal. But we still have work to do to complete the overhaul of the regulatory framework and fully factor in all of the lessons learned. We also need to see whether we have the balance right when it comes to simplicity and risk sensitivity. That work is going to keep the Committee busy for at least the next two years. But that is far from the end of it, because, as I have noted a number of times today, our policy work will not generate its full benefits if not implemented in a full, timely and consistent manner. So our implementation monitoring work is equally important. And then even when  6  BIS central bankers’ speeches  the new standards are implemented, we will need effective supervisors to ensure that they are adhered to. This is an area where the Committee has the potential to do much more, particularly once the policy pipeline begins to slow. In other words, the Basel Committee will continue to provide you with much to talk about – at this meeting and those in the future! BIS central bankers’ speeches  7