This period of time  BIS Review 47/2003  5  will also allow us to take careful note of valuable information coming from domestic consultations under way in some jurisdictions, including the process for the Advance Notice of Proposed Rulemaking in the United States. The Committee also discussed the importance of ensuring that the calibration of the New Accord achieves its objectives. Accordingly, prior to implementation, a further review of the calibration will be conducted on the basis of additional information, such as further impact assessments in some jurisdictions and the monitoring of banks’ parallel calculations. In terms of specific issues, a number of areas were identified where major improvements were possible: the expected versus unexpected losses calibration issue, securitisation, credit cards commitments and risk mitigation techniques. At present, we have offered for public review a proposal to resolve a fundamental concern raised by the industry on the treatment of expected versus unexpected losses. I would encourage those interested to read the statement outlining our proposed revision on our website and to share any thoughts you may have by the end of this year. We have also simplified the proposals for securitisation exposures, as we decided to replace the “Supervisory Formula” approach to unrated tranches with a simpler rule. Also, as we draw closer to finalisation, the Committee has intensified its efforts to facilitate a consistent implementation of the New Accord.
I’d like to discuss this morning why the Basel Committee believes that applying transparency and market discipline approaches in the New Capital Accord will help us achieve our objectives to reinforce the safety and soundness of the banking system. My first point will be that, despite its name, the New Capital Accord is about much more than just capital. It is also about maintaining a level playing field and about strengthening incentives to foster sound risk management through three pillars: risk sensitive minimum capital requirements, coordinated supervisory review and - importantly, given the theme of this conference - enhanced market discipline through greater transparency. The New Accord is therefore much more comprehensive than its 1988 forerunner. Second, I’ll comment on the rationale behind the compound approach followed by the Basel Committee that blends rules, discretion, and market-based incentives. It could be viewed as a portfolio of different policy approaches that allow supervisors to achieve or at least draw close to a kind of efficient frontier. Third, I’ll share with you key issues that the Committee faced in drafting the market discipline component of the New Accord and, specifically, I will mention some of the concerns that arose in our public consultations.