Assessment Methodology and Assessment Experience

BCP assessments are a form of peer review that helps to (a) identify regulatory strengths, risks, and vulnerabilities; (b) assess the level of observance of financial sector standards; (c) ascertain the financial sector’s developmental and technical assistance needs; (d)
prioritize financial sector policies; and (e) provide a reform agenda for improving the supervisory system.10 Furthermore, standards assessments support the analysis in the con­text of an analysis of the macroeconomic and structural risks affecting domestic financial systems.

Подпись: 5A BCP assessment involves an examination of the adequacy of the legislative and reg­ulatory framework and a determination of whether supervisors are effectively supervising and monitoring all of the important risks taken by the banks. The assessment should fol­low the guidance provided in the Core Principles Methodology by the Basel Committee on Banking Supervision (BCBS 1999).11 To achieve full objectivity, compliance with each principle is best assessed by a suitably qualified outside party consisting of at least two individuals with varied perspective so as to provide checks and balances.

Each principle is assigned criteria that are relevant for compliance with it. Two cat­egories of criteria are used: “essential criteria” and “additional criteria.” The essential criteria are those elements that should be generally present in individual countries for supervision to be considered effective. Typically, essential criteria specify certain policies and procedures that supervisors are expected to follow to comply with a core principle. The additional criteria are elements that further strengthen supervision and that all coun­tries should strive to implement to improve financial stability and effective supervision. Additional criteria may be particularly relevant to the supervision of more sophisticated banking organizations or may be needed in instances where international business is sig­nificant or where local markets tends to be highly volatile.

If one is to achieve full compliance with a core principle, the essential criteria gener­ally must be met without any significant deficiencies. There may be instances, of course, where a country can demonstrate that the core principle has been achieved through dif­ferent means. Conversely, because of the specific conditions in individual countries, the essential criteria may not always be sufficient to achieve the objective of the principle. Therefore, additional criteria or other measures may also be needed for the particular aspect of banking supervision addressed by the principle to be considered effective. Altogether, there are 227 essential and additional criteria.

As an example of the assessment process and the role of different criteria, consider the case of Core Principle 1. For this principle, each subprinciple is assessed separately. A “compliant” grading for Core Principle 1, for instance, requires that the essential criteria mentioned in the methodology be met, namely, that laws are in place and that responsi­bilities are clearly defined, that minimum prudential standards are in place, that defined mechanisms exist for coordination, and that those mechanisms are actually used.12 Furthermore, supervisors should have a role in deciding on resolution of banks, and laws should be updated as needed. Assessment of compliance with those criteria would, for instance, require obtaining and reading the texts of the relevant laws and including the citations in the assessment report. If one is to assess whether responsibilities are, in fact, clear, then information could be obtained on whether agencies cooperate effectively or whether turf issues arise frequently. Do annual reports of various agencies cover the same ground, or are they complementary? Are prudential regulations readily accessible, and do they cover the main prudential areas? If one wishes to review which areas are essential, the list of publications on the Basel Committee’s Web site could be consulted to obtain an impression of which areas have been considered important. Coordination mechanisms
should be established by a formal decision of the authorities and laid down in some form of decree or similar instrument. This decree should also define the mechanics of coordina­tion, the exchange of information, the procedures for dealing with confidentiality issues, and similar issues. The authorities should provide to the assessors descriptions of how recent bank resolutions were handled, showing, in particular, what role the supervisory authorities had played.

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