Once the phase of theoretical debate and standards drafting had been completed, the Committee’s activities, in particular through its Accord Implementation Group (AIG), focused on implementing the Framework. The time has therefore come to confront this practical reality, with all its difficulties and problems, through a dialogue with the industry and the global supervisory community. This is a major task, given that the aim is to strengthen banking systems and the international financial system, rendering them more robust, more stable, and thus more capable of contributing effectively to the growth and stability of our economies. Despite the importance of Basel II, the proposed agenda also shows us that this is not the only topic currently of interest to the supervisory community. Tomorrow, we will be discussing one of the Committee’s key projects, which, I am convinced, affects all these supervisors gathered here today. I am referring to the Basel Core Principles. With these introductory words, I would like to provide a general overview of the Committee’s work in these areas. First, I will focus on the revision of the Basel Core Principles, before moving on to talk about the implementation of the revised Framework. I will be referring to the necessary collaboration and coordination between supervisors, and will briefly touch on the other implementation-specific issues that the AIG is currently working on. Revision of the Basel Core Principles Looking at recent press headlines, one could easily conclude that the Committee’s activities over the last few years have been almost exclusively focused on Basel II.
This reflects the Board’s purpose of enhancing transparency in the conduct of monetary policy and provide guidance to the markets and the community on its possible future evolution. Summing up, we continue to assume that capacity gaps have been decreasing in recent quarters and will continue to do so in the next two years. In these circumstances, for inflation to converge to the target in the policy horizon, it is necessary that the monetary stimulus continue to be gradually withdrawn in the coming months. With this, we reaffirm our commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the two-year horizon. 5  A new supplement to the Monetary Policy Report: The labor market The labor market plays a central role in the functioning of the economy, and is particularly important for monetary policy. In the short term, the way this market responds to shocks and adjusts employment and wages, is key in the behavior of variables such as activity, consumption and prices. In the long term, the labor market plays a crucial role in trend growth, because of both the evolution of the labor factor and its contribution to productivity growth. Accordingly, the analytical framework of monetary policy has always paid special attention to the twists and turns of the labor market.