The Basel Committee on Banking Supervision is seeking comment on proposed revisions to its basic banking supervision principles.

The committee issued for public comment updated versions of the 1997 Basel Core Principles for Effective Banking Supervision and the 1999 Core Principles Methodology. The Basel Core Principles have been used by countries as a benchmark for assessing the quality of their supervisory systems and for identifying future work needed to ensure sound supervisory practices. They have also been used by the International Monetary Fund and the World Bank in the context of the Financial Sector Assessment Program.

The committee notes that changes have occurred in banking regulation over the years, and that experience has been gained with implementing the principles in individual countries. Updating the principles to reflect these changes and experiences aims to ensure their continued validity and usefulness, it stresses.

Changes to the principles have been kept to a minimum to ensure their continued relevance as a flexible, globally applicable standard, the committee says. The updated principles remain focused on banking supervision; issues related to the necessary infrastructure for effective banking supervision are discussed as preconditions and provide background for the assessment.

“As a result of the review, the Basel Core Principles have become more flexible to ensure efficient supervision of both advanced and less advanced banking systems,” it said. “In addition, cross-border and cross-sectoral trends and developments are reflected more comprehensively, as is the need for closer cooperation and information exchange between supervisors of different sectors and countries. The review also stresses the importance of the independence, accountability and transparency of bank supervisory authorities.”

Also, it notes that a new “umbrella” principle recommending that banks have integrated risk management systems has been added. In addition, the criteria for assessing interest rate, liquidity and operational risks have been enhanced, reflecting the increasing focus on these risks. The criteria dealing with the fight against money laundering and terrorist financing as well as fraud prevention have also been expanded.

To attain a higher degree of consistency between the Basel Core Principles and other related international standards, the committee collaborated with the International Association of Insurance Supervisors, the International Organization of Securities Commissions, the Financial Action Task Force and the Committee on Payment and Settlement Systems.

“Since 1997, the Basel Core Principles have made significant contributions to the enhancement of supervisory practices around the world, and we are keen to preserve their effectiveness and promote continuity by only making changes that are necessary” said Jaime Caruana, chairman of the Basel Committee and Governor of the Bank of Spain. “The documents we are publishing today are the result of a common endeavour between the BCBS and our supervisory colleagues from around the world, as well as the IMF and the World Bank. This initiative serves as an example of how engagement across a wide range of countries can really enhance the efficiency of our work and the quality of the outcome.”

Comments on the revised principles are due by June 23.