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Basel Committee on Banking Supervision goes to public consultation to formulate bank virtual currency handling policy

Cryptocurrency

To discuss handling policy regarding virtual currency

The Basel Committee on Banking Supervision (BCBS) has announced that it will hold public talks on “careful handling policy development for banks regarding crypto assets (virtual currency)”.

BCBS is an international financial rule-making body founded by the G10 Central Bank Governors’ Meeting. It consists of financial authorities in various countries and regions such as Japan, the United States and the EU, and has a secretariat in Basel, Switzerland.

In an official announcement on June 7, BCBS said it had discussed steps to establish “market developments related to cryptocurrencies and careful handling of banks’ crypto exposure.”

In the background is the growth of the virtual currency market

BCBS explained this background as follows.

Banks’ exposure to cryptocurrencies is currently limited, but cryptocurrencies and related services continue to grow and innovate. Some banks are also interested in these, and without a prudent treatment policy specific to them, they could increase concerns about financial stability and risk to the banking system globally. ..

While some banks are still gaining exposure to cryptocurrencies (generally affected by market price fluctuations), more banks are paying attention to cryptocurrencies, so handling rules are needed for the future. It is dressed as.

Therefore, BCBS has agreed to hold public consultations to gather stakeholder views on the design of the handling policy. The agreement will be issued within a week.

Public consultations will also take into account the response to BCBS’s previously issued cryptocurrency consultations and the initiatives underway in international forums and standards-setting bodies.

In 2019 BCBS invites public comments on cryptocurrency regulation policy. At this time as well, one of the emphasis was on “the role and risks of virtual currencies that banks should be aware of when conducting their virtual currency operations carefully.”

A prudent treatment policy generally requires banks to measure risk for various types of assets, such as loans and derivatives, and to determine the amount of capital they hold accordingly.

The Basel Committee on Banking Supervision (BCBS) has a mission to improve financial stability globally, but it does not have legal authority. The BCBS reports key decisions to the central bank governor and a group of supervisors for approval. The BCBS decision has no legal effect, and it is up to each country or region participating in the BCBS to incorporate that decision into its policy.

New Corona Pandemic Policy

At the same time as the discussion on cryptocurrencies, BCBS also discussed the policy on the pandemic of the new coronavirus. “The global economic environment is uncertain,” he said. “Banks and regulators need to remain vigilant for further risks and vulnerabilities.” “We should maintain lending to credible households and businesses,” he said.

A major bank watching the trends of virtual currencies

With the rise of the cryptocurrency market, some traditional banks are paying close attention to the trend and some are considering providing related services.

For example, at a US Congressional hearing in May, representatives of three major banks, Citibank, Wells Fargo and Bank of America, said they were paying close attention to cryptocurrencies. Bank of America is cautious, but Citibank and Wells Fargo are reportedly considering crypto-related services.

A Citibank representative said it was the bank’s responsibility to “ensure a clear control before getting involved with cryptocurrencies.” International rules, such as those promoted by BCBS, are also likely to be important in that they provide clear criteria for banks to enter crypto-related services.

Relation: How do major banks see cryptocurrencies?Three US banks are of view

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Author: A. Yamada
Reference: BIS

Images used under Shutterstock license
“Cryptocurrency” means “cryptographic assets”

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