On October 7, the World Council of Credit Unions, Inc. (WOCCU) met with four separate regulatory committees in Basel, Switzerland, the site of the Bank for International Settlements (BIS) headquarters, to discuss the role credit unions play in international finances and the financial services regulatory environment. Three of the four committees, the Committee on Payments and Settlement Services (CPSS), the Financial Stability Institute (FSI) and the Basel Committee on Banking Supervision (BCBS), are part of the (BIS), which acts as an international central bank, setting regulatory laws that affect both banks and credit unions on a global level.
Topics covered in these meetings included clearing and settlement systems, and ensuring they are accessible to credit unions; the work of the World Bank remittance task force, of which WOCCU is a part; upgrading the skills of credit union regulators; issues surrounding the new Basel II Capital Accord, a recent revision on capital requirements for financial institutions; and the BCBS' upcoming review of the Core Principles Methodology for banking supervision.
CPSS, which coordinates the central bank payment system for G-7 countries (a group of seven leading industrial nations that began meeting annually in the mid-1970s to address economic and political issues that they and the rest of the world face), was most interested in discussing systemically important large-value payment systems, as it has not yet focused on issues related to retail payment systems. During the meeting, use of CPSS's report on "Core Principles for Systemically Important Payment Systems" was granted to credit unions and WOCCU to employ in justifying CU's access to clearing and settlement systems.
The meeting with the FSI, the training arm of the BSI for financial institutions regulators globally, concluded with a similarly positive outcome. WOCCU will be working with FSI to review their programs and potentially jointly develop programs to ensure appropriate regulation of credit unions. WOCCU to develop and implement a prudentially sound of regulation manner that is unique to credit unions.
With the BCBS, Dave Grace, WOCCU's senior manager of association services discussed the provision of guidance for credit union regulators regarding the issue of how and if the new Basel II Capital Accord should apply to credit unions. They also spoke about a potential meeting between credit union regulators and the BCBS on recent regulatory developments, as well as the BCBS's review of the Core Principles Methodology for banking supervision. The BCBS shares WOCCU's standpoint that the Basel II should be applied differently according to national circumstances, representatives felt that CU regulators should meet on their own to discuss the current regulatory environment rather than BCBS imposing its own structure. BCBS also reported that the Core Principles review has begun and they were very interested in understanding how these should be adopted for credit union regulators.
"We consistently hear our members worldwide expressing the need for appropriate regulation and supervision. By working with the global authority or financial sector supervision we are significantly advancing the needs of our members and consumers," explained Grace.
Finally, the meeting with the Financial Stability Forum (FSF), an independent global coordinating body that monitors financial system vulnerabilities, focused on the role that credit unions play in financial stabilization, namely leveling income inequality. WOCCU proposed that the Forum adopt its International Principles for Credit Union Safety and Soundness, and although no conclusive agreement was made, the representatives encouraged the presentation of the proposal to the committee as a whole, which WOCCU may do at their next meeting.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 56,000 credit unions in 101 countries serve 200 million people. Learn more about World Council's impact around the world at www.woccu.org.