In part, these proposed changes are meant to address concerns about the potential adverse competitive effects of Basel II. The Federal Reserve takes concerns about competitive effects seriously and has conducted substantial research on the topic. During the process to amend Basel I, we sought input from the industry and other interested parties.
In view of those concerns, regulators have proposed changes to enhance the risk sensitivity of U.S. Basel I rules; we also remain vigilant about identifying potential competitive distortions that might be created with the introduction of Basel II.