BASEL, Switzerland—The Basel Committee on Banking Supervision has issued a revised Stress Testing Principles standard that will significantly reduce the regulatory burdens of stress tests on credit unions and other community-based financial cooperatives, according to the World Council of Credit Unions.
The revised principles follow a request by WOCCU earlier this year that called for a “proportional approach” to stress testing in any plan put forward by the Basel Committee, as CUToday.info previously reported.
Stress tests of credit unions and other community-based cooperative depository institutions are based on this Basel Committee standard and will now be implemented by regulators on a more proportionate basis, based on the size, complexity, resources and risk profile of the institution, WOCCU said.
“World Council members have often reported ‘gold-plating’ and excessive supervision involving stress testing and the Basel Committee’s updated stress testing principles should help end those excessive compliance burdens on credit unions,” said Michael Edwards, World Council’s senior vice president and general counsel, in a statement.
WOCCU further noted the Basel Committee’s new standard also found that national-level stress testing frameworks have evolved well beyond what the Committee envisaged when it issued its original stress testing standard after the global financial crisis. World Council applauds the Committee’s new approach that will help right-size the compliance burdens of stress tests for credit unions and other community-based financial cooperatives.