As you know, since the Second Consultative Document’s release 21 months ago, the members of the Basel Committee have worked collaboratively and publicly with supervisors, banks, and others to revise the proposals so that they best serve the needs of modern banking. We’ve published and discussed thousands of pages of proposals and studies with the industry and the public. The size of – and depth of detail in – those volumes demonstrates how hard we’ve been working and how great the challenge is. Challenges the Committee is resolving Indeed, while our consultations over the years have reflected on some of the finest – and occasionally highly esoteric – points of contemporary banking, the Committee encountered a few central concerns expressed by the industry – and sometimes by supervisors as well. Some of the overarching issues include the complexity of the proposals and their potential to be "procyclical." Other respondents have weighed in on proposed charges against operational risk and other particular exposures. I’d like to share with you now the latest news on how we are resolving those challenges. BIS Review 52/2002  3  Complexity of the New Accord First, to the issue of complexity. Anyone who’s dared to download the proposals in their entirety from the BIS website may have been surprised to find out how much paper it requires to print them out. The New Accord is truly weighty, in all meanings of that adjective.
Given the disappointing fiscal developments in some countries and the challenges which have emerged to the EU fiscal framework, we welcome the moves to correct or prevent excessive deficits, i.e. the implementation of excessive deficit procedures in the case of Germany and Portugal and the early warning issued to France. Countries with remaining imbalances are urged to prepare sufficiently ambitious consolidation plans for their forthcoming stability programmes. Emphasis should be placed on a growth-oriented consolidation policy that strengthens the productive forces of the economy. The Governing Council considers the recent Commission communication to be a good starting point for rebuilding confidence in the budgetary framework. As already reflected in the Statement on the Stability and Growth Pact of 24 October 2002, we fully support the Commission's main objective, namely to improve the implementation of the Pact within the existing framework of rules. Finally, I should like to stress again that there is still an urgent need to implement decisively the structural reform agenda. We note with some concern the slow progress in many euro area countries and call on governments to take determined action. The medium-term impact of these reforms on the economic growth potential of the euro area is likely to be substantial. A prompt implementation of structural reforms in the labour, product and financial markets is particularly important at this juncture since it would contribute to strengthening confidence in the euro area, thereby also supporting economic activity in the short term. We are now at your disposal for questions. 2  BIS Review 72/2002