International standard setting bodies have issued guidance to assist financial institutions in dealing with the Covid-19 crisis.
The World Council of Credit Unions (Woccu) welcomed the flexible approach, which it has long been campaigning for. It says regulatory flexibility enables credit unions to meet the financial needs of their members during the crisis.
Responding to the crisis, the Basel Committee on Banking Supervision provided relief to help financial institutions cope with the impact of Covid-19 on the global banking system by delaying deadlines for the implementation of the Basel III framework. Furthermore, the committee issued a statement highlighting that that supervisory authorities had additional flexibility to undertake further measures to alleviate the financial stability impact of the pandemic.
Woccu is urging national-level regulators to take note of this guidance and similarly allow for flexibility that will allow credit unions to serve their members during the crisis.
Likewise, the G20’s Financial Stability Board published a statement in which it encouraged authorities and financial institutions to make use of the flexibility within existing international standards to provide continued access to funding for market participants and for businesses and households facing temporary difficulties from COVID-19, and to ensure that capital and liquidity resources in the financial system are available where they are needed.
The International Financial Reporting Standards Foundation, which oversees International Accounting Standards Board, has also released guidance on how to account for expected credit losses in the light of current uncertainty resulting from the Covid-19 pandemic. The guidance refers to applying IFRS 9 Financial Instruments in the context of Covid-19, emphasising that entities should not continue to apply their existing expected credit losses methodology mechanically but instead take into account the existing environment.
“We are pleased to see the international standard setting bodies utilising their tools to provide much needed flexibility and guidance so our credit unions can continue to serve the needs of their members,” said Andrew Price, Woccu vice president of advocacy. “The guidance issued provides the basis for national-level regulators to likewise implement conforming accommodations.”