Furthermore, in some circumstances increasing banks’ sovereign exposures may actually play a stabilizing role. 15 These considerations, shared by most global supervisors, recently led the Basel Committee to leave unchanged the prudential treatment of sovereign assets. The problem of high public debt should be addressed by Governments directly, with determination. It should not be improperly tackled with prudential regulation.
But the changes are also evolutionary, in that they build on long-established practices; in that respect, they represent just one more step on the road toward greater transparency at the Federal Reserve. The Committee will continue to look for ways to improve the accountability and public understanding of U.S. monetary policy making. BIS Review 132/2007  7