In some jurisdictions, national supervisors will conduct additional field tests to determine whether the new rules deliver the levels of capital we expect. Similarly, in all jurisdictions, there will be a period of time during which banks will calculate their capital requirements in parallel under the 1988 Accord and under Basel II. National field tests and the period of “parallel running” of the new framework will serve as some of the final reality checks for Basel II prior to its implementation. We recognise that these tests and reviews will demand resources and substantial efforts from both banks and supervisors. Yet I must emphasise that neither banks nor supervisors will be able to evaluate the calibration of the new framework - and hence its effectiveness - if banks do not participate fully and seriously in the national field tests or in the periods of parallel running. I urge you to devote your best efforts and resources to these undertakings. Only you can provide the data that all of us will need to ensure that Basel II functions as we intend. b)  Monitor ongoing advances and clarify and provide guidance for selected rules  A second area where supervisors are active is in monitoring ongoing advances in risk management while clarifying and providing supplemental guidance for some of the rules. Like the development of the framework itself, this work will require a great deal of communication and co-operation between banks and supervisors.
c)  Home-host co-operation  A third area of focus for supervisors that I would like to highlight concerns our efforts to promote a more consistent application of the new framework across jurisdictions. Certainly one of the goals for any international framework is to foster a more level playing field for internationally active competitors. The Basel Committee wishes to ensure that competition between internationally active banks is driven by each bank’s individual strengths, rather than by differences in each country’s rules. I know that banks are deeply interested in this topic as well. Representatives from many internationally active banks have impressed on me their concern that supervisors must work to avoid large differences in the adoption of Basel II and, more specifically, in the use of advanced approaches across jurisdictions. While we in the Committee share this concern, we have to be pragmatic; I believe that all of us need to stop to make a quick reality check of this matter as well. Basel II is intended to promote a more level playing field for internationally active banks. Yet Basel II cannot and should not be expected to create perfect harmonisation across all jurisdictions. Differences in legal systems, market practices, and business environments in each country make it an extremely difficult task - and, indeed, an impossible one - to level all distinctions across all borders.