We have systematically tightened prudential and risk management standards. This will definitely strengthen the banking system. In the process, risk-based capital requirements based on the Basle framework have stimulated the issuance of tier 2 subordinated debt as part of the recapitalization process. Down the road, as the stock market recovers, banks should be issuing more equity to bolster tier 1 capital.
We intend to bring the banking system in compliance with Basle 2 by 2007. In preparation, we are now requiring universal and commercial banks to formally set up a minimum internal credit risk rating system for the underwriting and ongoing administration of corporate credit exposures. This is embodied in Circular No.