Finally, we have to do our best to ensure that market discipline is exercised in a relatively benign and gradual way – graded differentiation of spreads on debt for example, rather than sudden refusal by the market to rollover debt at any price. This means we need to think hard about the frequency as well as detail of disclosures, and specifically the trade-off between the two. Too frequent disclosure might not only be too onerous but also add to the volatility of company ratings. Too long and the potential for large step changes in an institution's risk profile will increase market uncertainty and volatility. Of course, there may be times when this cannot be avoided – the sudden emergence of fraud for example – which is where crisis management by the bank concerned and by the authorities comes into play. But we should not overemphasise the relevance of these new disclosure initiatives in this particular sort of situation: publicly owned banks are after all already required to disclose any information which could significantly affect their share price. BIS Review 43/2001  3  Impact of the New Basel Accord Turning to the Basel proposals on minimum capital, their aim is to align regulatory capital much more closely with risk. This should have financial efficiency benefits, as I explained just now. To the extent that seriously undercapitalised risk taking by banks will in the future be more difficult, there are also clear financial stability benefits.
This is in line with the growth in the activities of the two existing cross border PvP links recorded by us. Since 2010, the combined average daily turnover of the links with Malaysia and Indonesia has doubled, reaching a new record of $ billion last month. This is equivalent to an annual growth of about 23%. Other economies in the region, especially those with significant FX transactions, can similarly be benefited from a reduction in settlement risk and increase in efficiency in the settlement of FX transactions by establishing a PvP link with the USD RTGS system in Hong Kong. 9. The HKMA will continue to watch out for opportunities to collaborate with Asian neighbours to develop infrastructural solutions to meet growing regional demand for more efficient and robust settlement solutions. 10. Lastly, I would like to thank BOT again for the Bank’s commitment and professionalism leading to the successful launch of the PvP link. Based on the solid foundation laid through this project, I keenly look forward to working with BOT in other areas of central bank cooperation to contribute further to regional financial stability and prosperity. 11. Thank you. 2  BIS central bankers’ speeches