We believe that countries should adopt the options and approaches that are most appropriate for the state of their markets, their banking systems, and their supervisory structures. Basel II is not a “one size fits all” framework. Supervisors can adopt the framework on an evolutionary basis and use elements of national discretion to adapt it to their needs. For any country that is considering adopting Basel II but may not yet be ready, I like to suggest a three-stage approach towards building a foundation for the new framework: (1) strengthening the supervisory infrastructure; (2) introducing or reinforcing the three pillars; and then (3) making the transition from the 1988 Accord to Basel II. The first stage is strengthening the supervisory infrastructure. Basel II is not intended simply to ensure compliance with a new set of capital rules. Rather, it is intended to enhance the quality of risk management and supervision. One of the things that I strongly encourage for all countries is a review of implementation of the Basel Committee’s Core Principles for Effective Banking Supervision. These principles are key to laying a successful supervisory foundation. Likewise, sound accounting and provisioning standards are critical to ensuring that the capital ratios, however calculated, meaningfully reflect the bank’s ability to absorb losses. The second stage, then, is to consider how the second and third pillars of the new framework can be implemented. Supervisors do not need to wait for the formal adoption of Basel II to start introducing or using the principles of the three pillars.
For many firms, including Italian imprenditori, their market naturally expanded from their domestic market to the whole of the euro area. According to empirical studies, the euro has thus led to a 5 to 15% increase in trade between Member States. An internationally recognised currency The economic size of the euro area and the stability of its currency allow the euro to play an international role. Before the euro, in 1995, only the Deutsche Mark was an international reserve 2/6  BIS central bankers' speeches  currency, with a share of 15% of global reserves. Today, our shared currency accounts for 20% of international reserves, in second place behind the dollar. An internationally recognised currency generates economic gains: the financial markets are more attractive for foreign investors, more liquid, and therefore more efficient. But it also carries a political weight: I know that when Mario Draghi speaks at the G7 or at the G20, the whole world listens to Europe attentively. In the global financial arena, which has become turbulent, this union is our greatest chance; none of our countries would have such clout in insolation. Our sovereignty relies necessarily on European sovereignty. * * * The euro makes us more robust, and gives us more confidence in our currency: this is a considerable asset amidst so much uncertainty. The euro has naturally also provided us with a strong symbol of unity among European nations.