Recognizing many credit unions are serving countries and populations still left behind by the current COVID-19 recovery, World Council of Credit Unions sent a letter to the Basel Committee on Banking Supervision urging the international standard setting body to support a measured and orderly approach to the withdrawal of its pandemic relief measures.
Specifically, World Council encouraged the Basel Committee to consider a further delay in the implementation of Basel III into its regulatory framework to help facilitate the economic recovery during the pandemic.
It also advised the Committee to offer flexibility in the return of capital levels based on accounting relief granted for payment moratoriums, IFRS 9 expected loss analysis and the use of capital buffers. All those relief measures, if withdrawn abruptly, could create institutional stress.
In addition, World Council urged the Basel Committee to:
“It is important to allow national-level regulators a great amount of flexibility to adjust to local conditions and economies when removing COVID-19 relief measures for credit unions. Otherwise, unnecessary shocks to their balance sheets could hinder their ability to serve communities trying to recover from the pandemic,” said Andrew Price, World Council senior vice president of international advocacy and general counsel.
In addition to these steps, World Council's COVID-19 Global Response Committee, in cooperation with the Federation of Savings and Credit Cooperatives (FEDEAC) in Costa Rica, published a technical paper, Financial Strategy to Mitigate the Impact of the COVID-19 Crisis, which offers recommended strategies credit unions can utilize to manage the impact of the social and economic crisis generated by COVID-19.