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APRA joins global banking body

Monday 16 March 2009

 

The Australian Prudential Regulation Authority (APRA) has been invited to become a member of the Basel Committee on Banking Supervision, the global standard-setting body for banking regulation.

The Chairman of APRA and the Governor of the Reserve Bank will also be included in an enlarged governance body for the Basel Committee.

The core mandate of the Basel Committee is to strengthen bank regulatory practices and standards worldwide. It is best known for its international standards on bank capital adequacy (the Basel II Capital Framework, replacing the Basel Capital Accord); the Core Principles for Effective Banking Supervision; and the 'Concordat' on cross-border banking supervision.

Other countries invited to join the Basel Committee are Brazil, China, India, Korea, Mexico and Russia.

APRA Chairman Dr John Laker welcomed the inclusion of APRA in the Basel Committee. 'The invitation to become a member is an acknowledgement of the high regard in which Australia's financial regulatory regime is held in international circles, and confirmation that Australian regulatory authorities can make a significant contribution to global standard-setting in the future.'

'Since its formation in 1998, APRA has built up strong relations with key international bodies like the Basel Committee', Dr Laker said. 'Membership of the Basel Committee will ensure that Australia has a strong voice in global banking reform initiatives being developed in response to the global financial crisis.'

Background

The Basel Committee on Banking Supervision is the international standard-setting body for prudential regulation of banks. The Basel Committee provides a forum for regular cooperation on banking supervision matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. It seeks to do so by exchanging information on national supervisory issues, approaches and techniques, with a view to promoting common understanding. The committee uses this common understanding to develop guidelines and supervisory standards in areas where they are considered desirable.

The Basel Committee's members come from Australia, Belgium, Brazil, Canada, China, France, Germany, India, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Russia, Spain, Switzerland, the United Kingdom and the United States. The present Chairman of the Committee is Mr Nout Wellink, President of the Netherlands Bank.

Although previously not a member of the Basel Committee, APRA has been involved with its work for many years through participation on a number of sub-committees and working groups. APRA is currently a member or observer on six Basel Committee groups, covering issues such as supervisory arrangements, accounting, capital and liquidity. APRA has also contributed to the development of the Basel II Capital Framework through policy submissions and APRA's role as a coordinator of the global quantitative impact study.

The 2008 APRA Annual Report provides a full rundown on APRA’s international liaison efforts (pages 49-53).

The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding $6 trillion in assets for Australian depositors, policyholders and superannuation fund members.