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Bank Supervision
Page Content One of the key objectives of the Bank Supervision Department is to promote the soundness of the domestic banking system through the effective and efficient application of international regulatory and supervisory standards and best practice. In order to achieve this objective, the Bank Supervision Department retains two cornerstones for its regulatory and supervisory framework. The first is the Core Principles for Effective Banking Supervision (the Core Principles) issued for the first time in 1997 by the Basel Committee, and updated in 2006. The second is Basel II.
Furthermore, to stay abreast of international regulatory and supervisory developments, the Bank Supervision Department participates in, and contributes to, various international forums. These include the Group of Twenty (G-20) Finance Ministers and Central Bank Governors, as well as the Basel Committee and its subgroups.
The global financial crisis, which started in 2007, revealed fundamental weaknesses in international financial markets. In response to these weaknesses, international standard-setting bodies such as the G-20, the Financial Stability Board and the Basel Committee announced various initiatives, strategies, and new or amended requirements and standards.
Among others, the key aims of these are to
- enhance the Basel II framework;
- build high-quality capital in banks and mitigate procyclicality;
- introduce minimum global standards for funding liquidity;
- reform compensation practices to support financial stability;
- improve over-the-counter derivatives markets;
- address cross-border resolutions and systemically important financial institutions; and
- support the transparent assessment of countries’ national regulatory systems.
Going forward, these and other measures issued by the various international standard-setting bodies will remain focus areas to ensure that the legal and regulatory framework pertaining to the domestic banking sector reflects local and international market developments, and complies with the applicable international regulatory standards and best practice. The Bank Supervision Department has also started the process of amending the banking legislative framework to incorporate these measures as and where applicable.
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