Basel II at the very basic level consists of the Standardized Approach (SA) which recognizes and defines various asset buckets and assigns them risk weights in accordance with the type and nature of corporate issue and other transactions and delegating its qualitative assessment to external raters. The matrix of risk buckets and weights is considered to have added excessive complexity for less sophisticated banks.
This way we can focus our attention on the root causes of persistently large imbalances and impediments to their adjustment as mandated by our leaders? 10. That takes me to my fourth and final comment. A question has arisen whether the Framework exercise should be looking at only net imbalances of countries or also at intracountry or intra-regional imbalances, as appropriate.