WOCCU Seeks Further Guidance on Regulatory Proportionality
World Council follows up Basel Committee meeting with letter asking for additional instruction
April 04, 2019
MADISON, Wis.—Following a meeting between the Basel Committee on Banking Supervision and representatives of the worldwide credit union industry last week, the World Council of Credit Unions (WOCCU) wrote to the Committee Wednesday seeking further guidance on when less-complex regulatory approaches can be warranted for credit unions.
In its letter, WOCCU urged the Basel Committee to issue a set of high-level principles or weighing-factors national- or regional-level regulators can consider, noting many policymakers continue to feel obligated to apply Basel III and other Basel Committee standards to non-complex, purely domestic deposit-taking institutions such as credit unions.
Basel III is the global financial regulatory framework adopted by the Committee in response to the financial crisis of 2007-09, which aims to strengthen the regulation, supervision and risk management of banks.
World Council Senior Vice-President and General Counsel Michael Edwards noted in the letter the Basel III framework is intended only for internationally-active banks.
World Council asked the Basel Committee to consider issuing high-level principles or weighing factors for considering proportionality, such as:
- Whether the institution has cross-border operations.
- The complexity of the institution's assets.
- The asset-size of the institution.
- The institution's interconnectedness to the financial system.
- The degree to which the institution reports to multiple prudential supervisors.
- The extent and nature of the institution's off-balance-sheet exposures.
- The mix of business activities of the institution, such as whether it engages in community banking, commercial banking and/or investment banking.
World Council also asked the Basel Committee to welcome public consultation on the issue from a range of smaller banking institutions, such as credit unions, joint-stock community banks, savings banks, building societies and other cooperatives.
The letter followed an effort led by WOCCU making the case for proportionality to the Basel Committee last week with several representatives of the credit union industry, including Canadian Credit Union Association (CCUA) President & CEO Martha Durdin, Customer Owned Banking Association (COBA) President & CEO Mike Lawrence and Credit Union National Association (CUNA) Chief Advocacy Officer Ryan Donovan.
World Council of Credit Unions is the global trade association and development platform 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 300+ technical assistance programs in 89 countries. Worldwide, 89,026 credit unions in 117 countries serve 260 million people. Learn more about World Council's impact around the world at www.woccu.org.