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The Basel Committee on Banking Supervision 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.
Committee members agreed at its meeting on 8-9 October that Basel II implementation will help make the capital base more relevant to banks' changing risk profiles and that the Committee will closely monitor its impact.
The Committee also agreed to seek public consultation on the proposed standards for banks to hold capital against the default risk associated with complex, less liquid credit products in the trading book and to assess their impact on banks' capital requirements.
The Committee also emphasised the key role of Pillar 2, the Supervisory Review Process. In this regard, the Committee is pursuing various Pillar 2 topics related to implementation.
The Committee continues to assess the supervisory and risk management issues arising from recent financial market developments and, where appropriate, will consider supervisory responses that are pragmatic and proportionate.