The 2024 revised Basel Core Principles (BCPs) for effective banking supervision represent a significant update to the global minimum standards for sound prudential regulation and supervision of banks, issued by the Basel Committee on Banking Supervision (BCBS). The revision, driven by lessons from recent crises, structural trends, and feedback from global stakeholders, aims to strengthen banking supervision in response to evolving risks while preserving consistency with established frameworks.
Key Changes and Benefits:
- Financial Risks: The revised BCPs introduce a non-risk-based measure of capital (leverage ratio) to complement risk-based capital requirements, enhancing resilience against excessive leverage. They also strengthen expectations for credit risk management, including counterparty credit risk and securitization exposures, and improve the management of interest rate risk and concentration risks.
- Emerging Risks: The BCPs explicitly address climate-related financial risks and risks stemming from digitalization. Banks and supervisors are now required to adopt frameworks that can address these risks comprehensively and forward-lookingly. This includes enhanced oversight of digital financial services, integration of climate risk into risk management frameworks, and strengthening cybersecurity resilience.
- Operational Risk and Operational Resilience: Operational resilience is explicitly included as a critical component of operational risk. Banks are required to develop robust strategies, policies, and processes to manage operational risk and safeguard the continuity of critical operations. This includes comprehensive business continuity plans, incident response and recovery planning, and mapping and safeguarding critical operations.
- Systemic Risks and Macroprudential Supervision: The revised BCPs strengthen systemic risk monitoring and macroprudential coordination. Supervisors are expected to examine banks' common behaviors and interlinkages that could affect the stability of the banking system, and implement a process for assessing and identifying domestically systemically important banks. Cooperation among authorities and across borders is also emphasized.
- Strengthening Governance, Risk Management, and Transparency: The BCPs place greater emphasis on risk culture, corporate governance, risk appetite frameworks, and stress testing. They also introduce requirements for business model sustainability and strengthen expectations governing transactions with related parties, enhancing transparency and accountability.
- Non-Bank Financial Intermediation: The revised BCPs address the growing systemic footprint of non-bank financial intermediation by enhancing risk management expectations for step-in and counterparty credit risks, and strengthening supervisory powers and group-wide oversight.
- Strengthening Legal Protection for Supervisors: The revised BCPs reinforce the importance of legal protection for supervisors, ensuring that supervisory actions can be taken without fear of personal liability.
- Raising the Bar: From Additional to Essential Criteria: Several additional criteria have been upgraded to essential status, reflecting higher supervisory expectations. These include enhanced risk governance and ownership oversight, deeper risk measurement and internal oversight, and strengthening supervisory response and accountability.
Implementation Challenges:
While the revised BCPs offer significant benefits, their implementation presents challenges, particularly for emerging markets and developing economies (EMDEs) with capacity constraints. These challenges include:
- Proportionality: Effectively applying proportionality, a key tenet of the revised BCPs, remains a persistent challenge. Where supervisory capacity is limited, it can lead to either excessive leniency or overly rigid rulemaking.
- Climate-Related Financial Risk Reforms: Implementing climate-related financial risk reforms poses challenges due to limited supervisory capacity and technical expertise, as well as data availability and quality constraints.
- Operational Risk and Operational Resilience: Meeting higher expectations for operational and financial risk management requires capabilities that are still developing in many jurisdictions. The shift to operational resilience, for instance, demands expertise in cybersecurity, information and communication technology (ICT) risk, and third-party oversight.
- Problem Exposures, Provisions, and Reserves: The shift to operational resilience, for instance, demands expertise in cybersecurity, information and communication technology (ICT) risk, and third-party oversight, while forward-looking provisioning under expected credit loss models calls for robust data, modeling capacity, and supervisory judgment—all often in short supply.
- Supervising for the Long Term: Constraints on Business Model Assessments: Many EMDEs face political economy dynamics and capacity constraints that impair banks' governance, making it difficult to assess the long-term viability of banking business models.
- Bridging the Gap: Challenges in Operationalizing Enhanced Transparency Requirements: Moving to a regime in which there is more disclosure of corrective actions and sanctions may represent a significant shift, and it may be predicated on the legal and institutional framework to support the disclosure and a conscious shift of mindset toward more open practices.
- Building Robust Corporate Governance Frameworks: Weak institutional frameworks and limited board capacity, particularly in EMDEs, make it difficult to implement enhanced governance requirements. Political interference and the dominance of state-owned banks can further undermine effective governance.
Conclusion:
The revised BCPs present a strategic opportunity for jurisdictions to reinforce supervisory credibility, strengthen banking sector governance, and build long-term resilience. However, effectively applying the revised principles requires a strategic, phased approach to implementation—prioritizing the most critical areas and leveraging available support. Strengthening supervisory capacity requires sustained investment in skills development, data infrastructure, and analytical tools. Collaborating with international partners, engaging in peer learning platforms, and participating in technical assistance programs can accelerate progress. Legal and institutional reforms—particularly those that bolster supervisory independence and governance oversight—will also be essential. Above all, embedding proportionality into supervisory practice must go hand-in-hand with building the judgment and risk-sensitivity needed to apply it effectively.
THE 2024 REVISED BASEL COREPRINCIPLES FOR EFFECTIVEBANKING SUPERVISIONPublic Disclosure Authorized
Benefits and Practical Challenges for EmergingMarkets and Developing Economies
November 2025
Pierre-Laurent Chatain, Valeria Salomao Garcia, and Basak Yetisen TekerPublic Disclosure Authorized
THE 2024 REVISED BASEL COREPRINCIPLES FOR EFFECTIVEBANKING SUPERVISION
Benefits and Practical Challenges for EmergingMarkets and Developing Economies
November 2025
Pierre-Laurent Chatain, Valeria Salomao Garcia, and Basak Yetisen Teker
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TABLEOF CONTENTS
AbbreviationsV
AcknowledgementsVI
Executive Summary1
1. Context, Motivation, and Expectations of the Revision
1.1Background41.2.The Motivation behind the 2024 Reform51.3.What Has Changed—and What Has Not6
2. Key Changes and Their Effects on Enhancing Banking Supervision
2.1.Financial Risks82.2.Emerging Risks102.3.Operational Risk and Operational Resilience122.4.Systemic Risks and Macroprudential Supervision142.5.Strengthening Governance, Risk Management, and Transparency162.6.Non-Bank Financial Intermediation: Addressing Interlinkagesand Systemic Spillovers182.7.Strengthening Legal Protection for Supervisors202.8.Raising the Bar: From Additional to Essential Criteria20
3.Addressing Implementation Challenges of the Revised 2024Basel Core Principles22
3.1Proportionality233.2Implementing Climate-Related Financial Risk Reforms243.3From Risk to Resilience: Challenges in Operational Risk and Operational Resilience263.4Problem Exposures, Provisions, and Reserves273.5Supervising for the Long Term: Constraints on Business Model Assessments283.6Bridging the Gap: Challenges in Operationalizing Enhanced Transparency Requirements 293.7Building Robust Corporate Governance Frameworks30
4. CONCLUSION
34
ANNEX: Key Changes in the 2024 Revised Basel Core Principles36
ABBREVIATIONS
ACKNOWLEDGEMENTS
This paper was prepared by Pierre-Laurent Chatain (Team Lead and Lead FinancialSector Specialist), Valeria Salomao Garcia (Senior Financial Sector Specialist),and Basak Yetisen Teker (Senior Financial Sector Specialist), all from the WorldBank. The authors wish to thank Miquel Dijkman, Laurent Gonnet, Rekha Reddy,and Davit Babasyan (all from the World Bank); Monika Spudic (Basel CommitteeSecretariat); and Katharine Seal (IMF) for their useful comments, input, andsuggestions. The authors are also grateful to Jean Pesme (Global Director,EFNDR), Niraj Verma (Acting Global Director, EFNDR) and Saskia de Vries(Practice Manager, EFNFS) for their guidance, as well as Emma Dalhuijsen, EzioCaruso, Ismael Fontan, and Natalie Nicolaou (all from the World Bank) for theirearly comments. Thoughts and opinions expressed in the text belong solely to theauthors, and not necessarily to the authors’ employer, organization, committee,or other group or individual.1
ES.
EXECUTIVE SUMMARY
This paper examines the benefits and implementation challenges of the newlyrevised Basel Core Principles (BCPs) for effectiv
