BCBS 76

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Definition

BCBS 76 is a document published by the Basel Committee on Banking Supervision on November 2000 in the Cross-Border Issues category.

Title

Electronic Banking Group Initiatives and White Papers.

Abstract

Introduction

This discussion note explores the cross-border supervisory issues and challenges related to electronic banking (e-banking) activities and points out the need for international co-operation among supervisors to address these issues. It concludes by identifying four action items, which the Electronic Banking Group (EBG) believes will promote international co-operation and exchange of information among supervisors regarding e-banking risks and supervisory issues.

Background

The Basel Committee has issued a number of papers addressing sound supervisory practices for "home" and "host" country banking supervisors including guidance on effective cross-border communication and coordination. These papers serve as a basic reference for bank supervisory and other financial market authorities in all countries. They establish several key cross-border principles pertaining to (i) global consolidated supervision; (ii) contact and information exchange with host country supervisory authorities; (iii) and supervision of local operations of foreign banks.

The Basel Committee guidance has provided comfort to host-country supervisors that cross-border branches and subsidiaries licensed and supervised within their borders are capably supervised by the parent bank's home-country supervisor. However, many cross-border issues arise from the rapid expansion of e-banking activities that were not contemplated when the Basel Committee's existing guidance was developed.

E-banking is based on technology that by its very nature is designed to expand the "virtual" geographic reach of banks and customers without necessarily requiring a similar "physical" expansion. Such market expansion can extend beyond national borders, which significantly increases cross-border cooperation challenges for bank supervisors due to:

(i) The potential ease and speed with which banks located anywhere in the world can conduct activities with customers over interconnected electronic networks into countries where a bank is not licensed or supervised.

(ii) The potential ability of a bank or non-bank to use the Internet to cross borders and to seamlessly link banking activities that have typically been subject to supervision with non-banking activities that might be unsupervised by any financial market authority.

(iii) The practical difficulties faced by national authorities wishing to monitor or control local access to e-banking sites originating in other jurisdictions without the cooperation of home country authorities.

Adapting Basel Committee guidance as necessary to address e-banking issues is therefore a principal goal of the EBG.

Document Profile

  • Publication Date: November 2000
  • Publication Type: Other
  • Publication Status: Superseded
  • Publication Category: Cross-Border Issues
  • Number of Pages: 27
  • Keywords: E-banking, Operational Risk

See Also

Disclaimers

For definitive information on regulatory matters always consult primary sources, especially where it concerns legally binding rules and regulations.

The above regulatory document abstract is quoted verbatim in this Open Risk Manual entry and provided free of charge for the convenience of all internet users. There is no explicit or implicit endorsement of this web service by the Bank of International Settlements. The copyright of the included material rests with the original authors (Links to the original texts are duly provided).