Question

Discuss any three (3) Core Principles for Effective Banking Supervision (Basle Core Principles) that Supervisors across the globe may consider implementing in their respective jurisdictions?
(15 marks

Answer 1

Core Principles for Effective Banking Supervision that Supervisors across the globe may consider implementing in their respective jurisdictions are as follows-

1.Consolidate supervision: This is an essential element of banking supervision under which the supervisor supervises the banking group on the consolidated basis, applying prudenstial standars to all aspects of the banking benchmark accepted worldwide.

2.Home-host relationships:Home and host supervisors of cross-border coordinate with each other for better supervision which is inclusive in nature and help the group as a whole. Supervisors needs the local information of foreign banks and then tranform it according to the international benchmark.

3.Capital adequacy: - This is a principle under which a supervisor sets prudent and appropriate capital adequacy requirements for the banks .The supervisor defines the component of capital, bearing in mind their ability to soak up with losses . These capital requirements are not less than applicable basel standard.