Basel I - on which the world’s regulatory capital regime has been based for more than ten years - was a genuine step forward for most countries’ capital rules and a watershed for international cooperation among the world’s supervisors.
But it is certainly clear to those of you at this meeting that globalization, technology, and innovation have accelerated so dramatically that Basel I cannot provide the industrial world’s largest and most-complex banking organizations with a regulatory capital requirement that reflects their underlying risk exposures. Basel I, with its modest risk sensitivity, treats most loans as if they come from one quality category.