• Discusses recent episodes of market and operational disruptions.

• Basel Committee approves annual assessment exercise for global systemically important banks (G-SIBs).

• Finalises analytical report on liquidity risk insights from the 2023 banking turmoil.

The Basel Committee on Banking Supervision met virtually on 23–24 September to take stock of recent market developments and risks to the global banking system, and to discuss a range of policy and supervisory initiatives.

Recent market developments

Committee members discussed the spikes in market volatility in late July and early August. While the episodes were short-lived with no significant impact on the global banking system, they highlighted how the build-up of large, levered positions are prone to quick unwinding. They also underscored the importance of banks and supervisors continuing to vigilantly monitor and assess banks' interconnections with non-bank financial intermediaries.

The Committee also discussed the series of operational disruptions in July, which resulted in outages across numerous sectors, including some banks. These incidents highlighted the importance of banks' operational resilience and management of third-party risks, and the systemic risks stemming from the reliance on the same third-party software or service. The Committee is currently consulting on proposed Principles for the sound management of third-party risk.

Global systemically important banks

The Committee approved the results of the end-2023 assessment exercise for G-SIBs. The results will be submitted to the Financial Stability Board before it publishes the 2024 list of G-SIBs. 

2023 banking turmoil

The Committee finalised an analytical progress report on the lessons learned from the 2023 banking turmoil. As requested by the Brazilian G20 Presidency, the report builds on the Committee's initial report on the turmoil, with a particular focus on its follow-up analytical work on liquidity risk. The progress report will be submitted to G20 Finance Ministers and Central Bank Governors and published next month.

The Committee also discussed progress on its work to strengthen supervisory effectiveness in the light of the lessons learned from last year's turmoil by developing a suite of practical tools to support supervisors in their day-to-day work. This work covers the supervision of liquidity risk and interest rate risk in the banking book, the sustainability assessment of banks' business models, and the importance of effective supervisory judgment.

This forms part of a series of follow-up initiatives by the Committee to last year's banking turmoil.

Climate-related financial risks

The Committee continued to review the comments received on its consultation proposing a Pillar 3 disclosure framework for climate-related financial risks.