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Banking > Articles> The Basle Committee

Basle Committee

It is a committee of banking supervisory authorities, which has established by the Central bank Governors of the group of Ten countries in 1975. It consists of senior representatives of bank supervisory authorities and central banks from: Belgium, Canada, France, Italy, Japan, Luxembourg, Netherlands, Switzerland, Sweden, UK and USA. It usually meets at the Bank for International settlements in Basle, where its permanent secretariat is located.

The committee has stipulated in the five sections, the following eleven principles for banking supervisory authorities to apply in assessing bank's management of interest rate risk.

Board of Directors, should approve strategies and policies with respect to interest rate, risk management and ensure that senior management takes the steps necessary to monitor and control these risks.

Senior management must ensure that appropriate policies/procedures/ resources are available.

Banks should clearly define the individuals/committees responsible for managing interest rate risks. Larger/complex Banks should have independent unit for administration/design of Banks interest rates/risk measurement, monitoring and control functions.

Banks interest rate, risk policies and procedures be clearly defined and consistent with nature and complexity of their activities. Policies should be applied on the consolidated basis.

New products/activities to be introduced subject to adequate procedures and controls. 

Assumptions underlying the system should be clearly understood by risk managers and Bank management.

Banks must establish and enforce operating limits and other practices that maintain exposures within levels consistent with their internal policies.


Banks should measure their vulnerability to loss under stressful market conditions including the breakdown of key assumptions and consider their results at the time of review of policies.

Banks must have adequate information systems for measuring, monitoring, controlling and reporting interest rate exposures. 

Banks must have an adequate system of internal controls i.e. regular independent reviews and evaluations.

Supervisory authorities should obtain from banks sufficient and timely information. 

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