Core Principles for Effective Banking Supervision

This document, prepared in close co-operation with non-G10 supervisory authorities, is intended to be a basic reference for supervisory and other public authorities in all countries and internationally. The twenty-five basic principles set out here are considered essential for any supervisory system to be effective. This document is the revised version of the Core Principles for Effective Banking Supervision originally published by the BCBS in 1997.

This document is the revised version of the Core Principles for Effective Banking Supervision, which the Basel Committee on Banking Supervision (the Committee) originally published in September 1997. Along with the Core Principles Methodology, the Core Principles have been used by countries as a benchmark for assessing the quality of their supervisory systems and for identifying future work to be done to achieve a baseline level of sound supervisory practices.

The Core Principles are a framework of minimum standards for sound supervisory practices and are considered universally applicable. The Committee drew up the Core Principles and the Methodology as its contribution to strengthening the global financial system. Weaknesses in the banking system of a country, whether developing or developed, can threaten financial stability both within that country and internationally. The Committee believes that implementation of the Core Principles by all countries would be a significant step towards improving financial stability domestically and internationally and provide a good basis for further development of effective supervisory systems.

Assessment Methodology

An assessment of the current situation of a country's compliance with the Core Principles can be considered a useful tool in a country's implementation of an effective system of banking supervision. Experience has shown that self-assessments of countries' compliance with the Core Principles have proven helpful for the authorities, in particular in identifying regulatory and supervisory shortcomings and setting priorities for addressing them.  In order to achieve objectivity and comparability in the different country assessments of compliance with the Core Principles, the Committee has developed this Methodology, which does not eliminate the need for both supervisors and assessors to use their judgment in assessing compliance. The Core Principles have also been used by the IMF and the World Bank in the context of the Financial Sector Assessment Program to assess countries' banking supervision systems and practices.