Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

Why might the Basel Committee on Banking Supervision influence the establishment of banking supervisory groups?

1. To set interest rates globally

2. To improve safety and soundness in banking

3. To increase government control

4. To regulate consumer lending practices

The correct answer is: To improve safety and soundness in banking

The Basel Committee on Banking Supervision (BCBS) plays a crucial role in establishing standards and guidelines that aim to enhance the stability of the global banking system. The correct answer focuses on the committee's primary objective of improving the safety and soundness in banking operations. The Basel Committee develops frameworks like the Basel Accords, which emphasize risk management and capital adequacy requirements that banks must adhere to. By promoting best practices and fostering effective banking supervision across different jurisdictions, the BCBS helps banks manage risks better, ensure adequate capital buffers, and maintain a robust banking infrastructure. This ultimately fosters public confidence in the banking system and mitigates the risk of financial crises that can occur due to systemic vulnerabilities. While other options mention various aspects related to banking and regulation, none align as closely with the BCBS's foundational goals. The committee is not concerned with setting global interest rates, increasing government control, or regulating consumer lending practices directly; instead, its focus is on banking supervisory frameworks that create a safer financial environment overall.