Basel Committee issues home-host sharing guidelines for Basel II

The Basel Committee on Banking Supervision has issued a consultative document on enhancing home-host information sharing guidelines for banking supervisors to set up a framework for the effective cross-border implementation of the Basel II capital Accord.

The paper, available on the website of the Bank for International Settlements (www.BIS.org), sets out the general principles and gives some practical examples for banking supervisors as they develop their Basel II implementation strategies. The Committee said the need for supervisory validation and approval of banks’ Basel II approaches across jurisdictions makes it necessary for supervisors to improve information sharing both to reduce the regulatory burden on banks and to conserve scarce supervisory resources.

The paper stresses, for example, the importance of flexibility and pragmatism in sharing information, but acknowledges local confidentiality laws should be taken into account to facilitate the smooth implementation of Basel II. It also notes that approaches among supervisors may differ with regard to Pillar II and that an in-depth discussion may be required between home and host supervisors on Pillar II and its impact.

“As supervisors implement Basel II on a bank-by-bank basis, this paper will assist them in developing effective information-sharing processes,” said Jaime Caruana, chairman of the Basel Committee and governor of the Bank of Spain. “We need to foster more effective supervisory cooperation, which is key to the success of implementing Basel II.”

The consultation paper was developed in association with the Core Principles Liaison Group, a Committee working group that includes banking supervisors from sixteen non-Committee member countries, and invites comments to be submitted by February 28, 2006.