Evento: 1st European XBRL Conference for Financial Services. Organizado por: Organizada por Europe dentro del 6º Programa Marco de la Comisión Europe

Roldán Alegre, José María

English

Repositorio Institucional de la Biblioteca del Banco de España

BANKING SUPERVISORS AND XBRL1st EUROPEAN XBRL CONFERENCE FOR FINANCIAL SERVICESJosé María RoldánDirector General of Regulation, Banco de EspañaChair of XBRL España Chair of Committee of European Banking Supervisors (CEBS)London, 29 June 20052INTRODUCTION Speaking today in three capacities3THE IMPORTANCE OF XBRLNot just a technical “IT” matterMarket efficiency and the role of information flowsAlso, relevant to banking supervision, both nationally and internationallyXBRL presents a unique opportunity to improve information flows for both the generators and users of financial information, which will in turn promote greater efficiency for the system as a wholeThese benefits come through flexibility – integrity - speed4THE SPANISH PERSPECTIVESpain’s involvement– Spain became an XBRL jurisdiction in 2004– XBRL España Association is chaired by Banco de España (Central Bank and Banking Supervisory Authority of Spain). Public interest aspect of XBRLAim of XBRL España – To foster the introduction, adoption and development, both at a national and international level, of the XBRL language, for the purpose of unifying the standards applicable to financial and business reporting5MEMBERS AND ACTIVITIES OF XBRL ESPAÑAXBRL España has grown rapidly from 11 founding members in April 2004 to 36 current members, from both the private and public sector, which collaborate in a partnership for the adoption and implementation of XBRLXBRL España fosters collaboration among regulators and other public sector bodies involvedXBRL España is currently involved in the development of 7 domestic taxonomies + collaborating with CEBS in the development of the Common Reporting taxonomy6THE INTERNATIONAL PERSPECTIVEFinancial communication must adapt to the reality of increasingly international business modelsXBRL means that financial information from entities can be understood and assimilated in other parts of the world in an accurate and timely mannerIn the banking sector, it could be a means of finding a common language for financial information needsIt could thereby facilitate supervisory co-operation and promote a level playing fieldThis is consistent with the needs of the EU single market in banking: integrated market with pan EU banks, multiple supervisory authorities and a single set of accounting and prudential rules.7CEBSWhat is CEBS?– A high-level committee of representatives from the banking supervisory authorities and central banks of the European UnionWhat are its tasks?– to advise the European Commission on banking policy issues, in particular for the preparation of draft measures for the implementation of EU legislation– to foster consistent day to day implementation and application of Community legislation by issuing guidelines, recommendations and standards – to promote supervisory co-operation and provide for the exchange of supervisory information8CEBS & COMMON EU REPORTINGCEBS has taken two initiatives to promote common reporting requirements:1. Common reporting of the solvency ratio (COREP):Public consultation ended 30th April2. Common reporting for financial data (FINREP):Public consultation underwayThese initiatives take advantage of the fact that Basel II and IAS will require all supervisors to change their reporting requirementsCommon EU reporting faces a trade off:– Simplicity (minimum harmonization)versus– Common framework9CEBS AND SOLVENCY RATIOSupervisors require banks to report on their risks and related capital requirements => capital adequacyCEBS is developing a set of common templates to be used by EU supervisors under future Basel II regimeCEBS has also recommended a common technology protocol based on XBRL: taxonomy currently being developed by CEBS– The initiative of developing an XBRL taxonomy for COREP was supported by the industry in the public consultation process that ended on 30 April 10CEBS AND FINANCIAL DATACEBS is developing a set of common templates for reporting balance sheet, profit and loss account and annexesFor credit institutions which prepare consolidated data according to the international accounting standards (IAS/IFRS)CEBS has also recommended a common technology protocol based on XBRL: taxonomy to be developed in future by CEBS11BENEFITS OF COMMON REPORTINGN.B.: These initiatives are the first of their kind!Expected benefits– Level playing field – Less administrative burden for cross-border groups (and limited burden for small, local banks)– Removal of potential obstacle to financial market integration– Easier exchanges of information between supervisors– Increased cost effectiveness of supervisory activities in the EU– More flexible framework: across countries and over time12IMPACTReporting now… and later… EU GroupReportingSupervisor 1Supervisor 3Supervisor 2Various data streams Common frameworkDifferent reporting standards Single formatManual processes Automated data collectionEU GroupReportingSupervisor 1Supervisor 2Supervisor 3XBRLXBRL13A WORD OF CAUTIONFull convergence, i.e. having the same reporting requirements for all institutions across the EUSounds attractive in principle……but beware the practical issues– Legal problems– Flexibility– TimeCEBS’ approach provides a solution that should avoid these problems14HOW XBRL CAN ENHANCE THE BENEFITS OF COMMON EU REPORTING (I)XBRL will enable banks to fulfil the reporting requirements of supervisory authorities across the EU with a single IT standard ⇒ The costs of implementing EU common reporting in cross border groups will be reduced ⇒ Less administrative and implementation costsSmall banks may benefit from a free standard like XBRL and the economies of scale derived from the development of the XBRL taxonomy by CEBS⇒ Less implementation costsAlso, supervisors may benefit from economies of scale ⇒ Increased cost effectiveness of supervisory activities15HOW XBRL CAN ENHANCE THE BENEFITS OF COMMON EU REPORTING (II)XBRL will provide the flexibility to accommodate in a consistent manner:– Multiple layers of legislation/regulation at the national level– Multiple languages and references– Each supervisor to easily customize the data it will receive according to its needs⇒ Easier exchanges of information and increased cost effectiveness of supervision16HOW XBRL CAN ENHANCE THE BENEFITS OF COMMON EU REPORTING (III)XBRL standard will facilitate the transmission of the common definitions expressed in common EU reporting ⇒ Level playing field and removal of obstacles for financial market integrationIn short, the compatibility of formats, contents and IT systems supported by XBRL will allow supervisors to collect information on a decentralized way, while having all the functionalities as if a centralized data base were in place and benefiting from additional flexibility17THE RISKS OF PROGRESS…Risk of inconsistent results due to rapid progress in so many different placesNot suggesting a slow-down of activity!But good coordination is essentialTherefore, the role of bodies like XBRL in Europe will be crucial18BUT ALSO THE PROSPECTS OF SUCCESS ARE HIGHScenario analysis– Worst case: only in Spain, only for banks. Still, huge advantages– Next steps⇒ All regulators in Spain⇒ All banking regulators in EU⇒ Basel II/IFRS reporting worldwide…The strength of XBRL: It makes sense even in a worst case scenario!Thank you for your attention

Banking Supervisors and XBRL

https://repositorio.bde.es/bitstream/123456789/22104/1/IIPP-2005-037.pdf

Banking Supervisors and XBRL

Abstract

Similar works

Full text

Available Versions

Repositorio Institucional de la Biblioteca del Banco de España