Proportionality in Stress Testing Urged by WOCCU to Basel Committee on Proposal

World Council urges the Basel Committee on Banking Supervision (Committee) to adopt the principle of proportionality in its proposal on stress testing principles in its comment letter.  The Committee recently opened for comment its Consultative Document: Stress Testing Principles wherein it is moving to a shorter, higher-level articulation of existing principles which will allow for a more robust development of stress testing practices. WOCCU members have often reported “gold-plating” and excess supervision involving stress testing.  Accordingly, World Council is urging the Committee to finalize this standard in a manner that ensures that supervisory practices required for stress testing are commensurate with the risk profile and systemic importance of the supervised entity and to ensure credit unions are not unduly burdened by unnecessary oversight.

A copy of the letter can be viewed here.