FSS Governor attends Basel Committee meeting to discuss banks’ prudential rules for cryptoassets

Lee Chan-jin, governor of South Korea’s Financial Supervisory Service (FSS), attended a top-level meeting of the Basel Committee on Banking Supervision (BCBS) to discuss prudential regulatory measures related to banks’ cryptoassets (cryptocurrencies).

According to the FSS on the 12th, Lee attended the BCBS’s top-level meeting, the Group of Central Bank Governors and Heads of Supervision (GHOS), held in Basel, Switzerland on the 9th (local time), where participants discussed the implementation status of Basel III rules and measures to manage cryptoasset exposures (the scale of exposure), among other issues. The meeting was attended by heads of financial supervisory authorities and central bank governors from 28 major economies, including the United States, Europe and Japan.

The meeting reviewed member jurisdictions’ progress in adopting Basel III rules. About 75% of member jurisdictions are known to have already implemented the relevant regulations or are preparing to introduce them. South Korea established a regulatory framework aligned with global standards, following the early adoption of credit risk rules in 2020 and the application of the final standards related to market and operational risk in 2023.

Participants agreed that maintaining a consistent global regulatory framework is important amid heightened volatility in financial markets. They also agreed to consider, at the BCBS level going forward, reviewing prudential standards for banks’ cryptoasset exposures and methodologies for assessing global systemically important banks (G-SIBs).

Lee later met with Christine Lagarde, president of the European Central Bank (ECB), in Frankfurt, Germany, to exchange views on key risks in global financial markets as well as the direction of regulation and supervision for digital assets. He said that while financial market volatility has increased due to geopolitical tensions in the Middle East, the FSS is working to manage market stability based on crisis response experience it has accumulated.

He also stressed that financial stability and financial consumer protection are being set as core principles in the process of building a supervisory framework for digital assets.

Lee also held talks with Petra Hielkema, chair of the European Insurance and Occupational Pensions Authority (EIOPA), to discuss measures to strengthen consumer protection in the insurance and pension sectors and policy responses to risks related to ageing and climate change. He also requested cooperation to ensure that the equivalence assessment of reinsurance regulation between South Korea and the European Union (EU) proceeds smoothly.