What is the primary role of the Basel Committee on Banking Supervision?

The primary role of the Basel Committee on Banking Supervision is to set international banking regulations. This committee, established by the central bank governors of the Group of Ten countries, plays a crucial role in formulating broad supervisory standards and guidelines for banks. Its primary focus is to enhance the stability of the global banking system by establishing a framework for effective banking supervision.

By developing comprehensive guidelines, the Basel Committee aims to ensure that banks maintain adequate capital to cover their risks, thereby promoting financial resilience and protecting depositors. The Basel Accords, including Basel I, II, and III, have been instrumental in shaping capital adequacy risk management policies across nations, encouraging consistency and cooperation among regulatory authorities globally.

The other options relate to different functions that do not align with the specific mandate of the Basel Committee. For instance, creating competitive banking markets would primarily involve market regulation and competition policy, while providing loans to developing countries typically falls under the purview of international financial institutions, such as the World Bank. Regulating stock market practices is generally managed by securities regulators rather than banking oversight bodies. Therefore, setting international banking regulations is the correct identification of the Basel Committee's core function.