| Final version of Basel II published
The Basel II Framework sets out the details for adopting more risk-sensitive minimum capital requirements for banking organisations. The new framework reinforces these risk-sensitive requirements by laying out principles for banks to assess the adequacy of their capital and for supervisors to review such assessments to ensure banks have adequate capital to support their risks. It also seeks to strengthen market discipline by enhancing transparency in banks’ financial reporting. The text that has been released reflects the results of extensive consultations with supervisors and bankers worldwide. It will serve as the basis for national rule-making and approval processes to continue and for banking organisations to complete their preparations for the new Framework’s implementation. “Basel II embraces a comprehensive approach to risk management and bank supervision,” explained Mr Jean-Claude Trichet, chairman of the G10 group of central bank governors and heads of bank supervisory authorities and president of the European Central Bank. “It will enhance banks’ safety and soundness, strengthen the stability of the financial system as a whole, and improve the financial sector’s ability to serve as a source for sustainable growth for the broader economy. I am pleased to offer this revised framework to the international community.” “The new Framework represents an unparalleled opportunity for banks to improve their risk measurement and management systems,” added Mr Jaime Caruana, chairman of the Basel Committee on Banking Supervision and Governor of the Bank of Spain. “It builds on and consolidates the progress achieved by leading banking organisations and provides incentives for all banks to continue to strengthen their internal processes. By motivating banks to upgrade and improve their risk management systems, business models, capital strategies and disclosure standards, the Basel II Framework should improve their overall efficiency and resilience.” The G10 governors and supervisors supported the Basel Committee’s plans to continue discussions on key implementation issues with the industry and other authorities as domestic adoption and approval processes proceed. The Basel Committee intends for the new framework to be available for implementation in member jurisdictions as of year-end 2006. The most advanced approaches to risk measurement will be available for implementation as of year-end 2007, in order to allow banks and supervisors to benefit from an additional year of impact analysis or parallel capital calculations under the existing and new rules. The G10 governors and supervisors encouraged authorities in other jurisdictions to consider the readiness of their supervisory structures for the Basel II Framework and recommended that they proceed at their own pace, based on their own priorities. For more information and to review all the framework documents visit http://www.bis.org/publ/bcbs107.htm The US Federal Reserve has outlined US implementation efforts at http://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040626/
•Date:
30th June 2004 • Region: Various •Type:
Article •Topic: Operational
risk |
