The Committee has recently published a  4  BIS Review 45/2006  newsletter clarifying supervisors’ expectations in terms of the requirements to be met in order for these types of models and databases to be accepted under IRB approaches. Conclusion As we can see, there are a fair number of open topics on the table as regards Basel II implementation. Many of them already existed under Basel I, but now we have a much better idea of their size and nature, and have created better structures and processes to address them. Since work started on the application of the new capital recommendations, the Committee members and the supervisory community as a whole have made considerable progress in understanding and resolving difficulties, and along the way we have improved the level of cooperation and trust between supervisors, as well as the level of communication and mutual understanding with the banking industry on such sensitive subjects as the management of risks and capital. The reality we supervisors are facing was already complicated even before the introduction of Basel II. But now the quality of our knowledge and the way in which we handle the risks and challenges have improved thanks to the revised Framework’s introduction. I would say that all of this is, in my opinion, positive. I would like once again to extend my thanks to ASBA and the FSI.
Finally, it is my view that, over and above the formal standards and protocols, the really important thing is cooperation and communication in good faith between supervisory colleagues. Cooperation is, therefore, a two-way street, and I believe that we all understand that we need to accept a minimum level of flexibility, based on mutual trust and reciprocity, if we want cooperation between supervisors to be effective. Basel II implementation: other aspects Turning now to the other topics currently being discussed, I would like to mention Pillar 2 of the revised Framework as an aspect which is receiving increasing attention. Concretely: the Group is currently exchanging views on how this pillar can and should be applied consistently within an international banking group. As we can see, the question of cooperation among supervisors is not limited to the use of advanced models under Pillar 1, and it is thus necessary to be able to exercise this degree of flexibility as regards the nature and scope of such cooperation. There are also certain topics on which it would be desirable that both banks and supervisors move forward more decisively.