Following a meeting between credit union industry representatives from around the world, including CUNA and the World Council of Credit Unions, the World Council wrote to the Basel Committee on Banking Supervision Wednesday to ask for further regulatory proportionality for credit unions. The Basel Committee is the primary global standard-setter for the prudential regulation of banks.
Regulatory proportionality is a practice that allows national and regional financial regulators to prescribe less burdensome compliance standards to credit unions than those required by the Basel III framework and other international standards.
CUNA Chief Advocacy Ryan Donovan was among credit union representatives to meet with the committee last week to call for tailored regulations for credit unions, noting that though Basel focuses on international banks, its work impacts credit unions around the world.
In its letter, the World Council calls for additional guidance in the form of high-level principles or weighing factors on when less complex regulatory approached can be warranted.
It also noted that that without additional guidance, many national-level policymakers continue to feel obligated to apply Basel III (the global regulatory framework adopted by Basel in response to the financial crisis) and other Basel Committee standards to non-complex, purely domestic deposit-taking institutions such as credit unions, and that the Basel framework is intended only for internationally active banks and the expensive compliance standards are not warranted for credit unions.