BIS Review 92/2008  7  Meade, E. and D. Stasavage (2008), “Publicity of Debate and the Incentive to Dissent: Evidence form the US Federal Reserve”, The Economic Journal, april, pp. 696-717. Woodford, M. (2007), “The Case for Forecast Targeting as a Monetary Policy Strategy,” Journal of Economic Perspectives, Vol. 21, No. 3-24. 8  BIS Review 92/2008
One specific concern that some have expressed about Basel II’s applicability in emerging markets is that banks with more basic risk management systems will rely on external credit ratings issued by rating agencies under Basel II’s standardised approach to credit risk. In some emerging markets, there may still be few, if any, rated companies. The Committee has been mindful of this concern. If supervisors are uncomfortable with the use of external ratings in their countries, they may opt to weight all corporate claims at 100%, while sovereigns and banks can be risk weighted according to the risk scores of export credit agencies. This eliminates the dependence on ratings issued by external credit agencies. Indeed, our discussions with colleagues and counterparts from countries outside the Committee, including India, as I mentioned, have been instrumental in addressing other concerns in the capital framework. Thanks to our consultations, we have endeavoured to address several other broad issues in the new framework, including the document’s apparent complexity and the consistency of its application internationally, which I will set out now. Complexity One inevitable by-product of designing a comprehensive three-pillar framework with a range of options for different circumstances is increased complexity. The members of the Basel Committee certainly recognise that it is far easier to enforce a simple rule than a complicated one.