Private and public registries for supporting banking sector regulation and supervision

Abstract

This article provides an overview of the different credit reporting systems that co-exist in Europe, their main role and characteristics. Credit reporting systems (CRSs) are important institutions in credit markets in that they provide a complete picture of an individual or firm’s creditworthiness. One of the most important institutional elements supporting a well-functioning credit market is credit reporting firms. This article is about the importance of the information in Public credit registries (PCRs) and Private Credit Bureaus (CBs) for supporting and improving banking sector regulation and supervision. PCR databases contain individual credit information on borrowers makes it possible to implement advanced techniques that measure banks’ credit risk exposure. It also allows optimizing the prudential regulation ensuring that provisioning and capital requirements are properly calibrated to cover expected and unexpected losses respectively. PCRs will play a role in the adoption of the new International Regulatory Framework for Banks (Basel III). Bank on-site examinations and off-site monitoring can be more efficient and effective when supervisory authorities have direct access to credit data from PCRs and CBs.