I will discuss some of those aspects shortly. It is important to keep in mind, however, that the core goal of Basel II is to promote the stability of the U.S. financial system by ensuring the safety and soundness of U.S. banks. Its ability to promote that objective is the first criterion on which the proposed Basel II framework should be judged.
I stated that the core goal of Basel II is to promote the stability of the U.S. financial system; but, as everyone here understands, the U.S. banking and financial system is increasingly interwoven with that of the rest of the world. Indeed, increasing globalization was a major factor that led the U.S. banking agencies to negotiate the Basel I agreement in 1988.