What are Standards?

Standards set out what are widely accepted as good principles, practices, or guidelines in a given area.

Standards may be classified by their scope:

• Sectoral  These cover the economic and institutional sectors such as the government and central bank, banking, securities, and insurance industries, and the corporate sector

• Functional  Within each sector, standards cover areas such as governance, accounting, disclosure and transparency, capital adequacy, regulation and supervision, information sharing, risk management, payment and settlement, business ethics, etc.

From an implementation perspective, standards also differ in their specificity:

• Principles  These are fundamental tenets pertaining to a broad policy area. Principles are usually set out in a general way and therefore offer a degree of flexibility in implementation to suit country circumstances, e.g. the Basel Committee's Core Principles for Effective Banking Supervision, IOSCO's Objectives and Principles of Securities Regulation, IAIS's Insurance Supervisory Principles, and CPSS's Core Principles for Systemically Important Payment Systems

• Practices  These are more specific and spell out the practical application of the principles within a more narrowly defined context, e.g. the Basel Committee's Sound Practices for Loan Accounting, IOSCO's Operational and Financial Risk Management Control Mechanisms for Over-the Counter Derivatives Activities of Regulated Securities Firms, and IAIS's Supervisory Standards on Licensing

• Methodologies/Guidelines  These provide detailed guidance on steps to be taken or requirements to be met and are specific enough to allow a relatively objective assessment of the degree of observance