This is especially important in the European Union, in which U.S. banking organizations have substantial operations. As of December 2001, 27 U.S. banking organizations operate in the European Union with aggregate EU assets of over $ billion. Moreover, 66 EU banking organizations conduct commercial banking and other financial services in the United States with aggregate U.S. assets of over $ trillion.
In order to address the procyclical issues, the Basel Committee is working closely with the International Accounting Standards Board (IASB) towards an expected loss approach to loan loss provisioning instead of the current practice of incurred loss approach.