The Basel Committee on Banking Supervision (BCBS) discussed a range of policy and supervisory initiatives. Among them, there was agreement to develop potential measures to address window-dressing behavior by some banks in the context of the framework for global systemically important banks.
The Committee discussed a range of empirical studies that highlight “window-dressing” behavior by some banks in the context of the framework for global systemically important banks (G-SIBs). Such regulatory arbitrage behavior seeks to temporarily reduce banks’ perceived risk profile around the reference dates used for the reporting and public disclosure of the G-SIB scores.
As noted previously by BCBS, window-dressing by banks is unacceptable. Such behavior undermines the intended policy objectives of the BCBS’s standards and risks disrupting the operations of financial markets. To that end, it was agreed to consult in 2024 on potential policy options aimed at reducing it. To help inform this work, BCBS will collect higher-frequency data.
Climate related financial risk, crypto asset and interest rate risk in the banking book were also discussed.