Our task is confined to ensuring that structural changes do not undermine the soundness and “supervisability” of banking institutions, and that bank shareholders are suitable. So, with this in mind, let me turn to the main topic that I would like to discuss, which is the Basel II initiative. When the IIF met in Madrid last July, the Basel Committee had just released the text of the revised capital framework. The publication of Basel II marked a critical milestone in our efforts to improve the risk-sensitivity of bank capital requirements while providing incentives to strengthen the quality of risk management. I think that on this occasion the meeting of the IIF has been preceded by another milestone in our work in relation to the new capital framework. A successful meeting of the Basel Committee concluded yesterday. Among other things, we dealt with the double default and trading book issues, on the basis of the work undertaken in close collaboration with the International Organization of Securities Commissions. I think this teamwork between IOSCO and BCBS can also be perceived as a landmark in the area of cooperation among supervisors. Let me therefore start by talking about this work strand. Then I will try to clarify some aspects of the calibration exercise and, finally, I will address implementation issues of Basel II. When we were in Madrid last summer, I mentioned that supervisors were very interested in finding practical and prudent solutions to the treatment of certain exposures under Basel II.
European Central Bank: Press conference - introductory statement Introductory statement by Mr Willem F Duisenberg, President of the European Central Bank and Mr Lucas Papademos, Vice-President of the European Central Bank, at the press conference held in Frankfurt, 5 December 2002. *  *  *  Ladies and gentlemen, the Vice-President and I will now report on the outcome of today's meeting of the Governing Council of the ECB. We continued our in-depth assessment of monetary, financial and economic developments and the discussions we had in early November on the appropriate stance of monetary policy, taking account of the new information. Overall, since our last meeting, the arguments in favour of a cut in the key ECB interest rates have strengthened. The evidence that inflationary pressures are easing has increased, owing in particular to the sluggish economic expansion. Furthermore, downside risks to economic growth have not vanished. As a result, the Governing Council has decided to lower the key ECB interest rates by 50 basis points. At today's meeting, we also reviewed the reference value for monetary growth, which has an important role under the first pillar of the ECB's monetary policy strategy. The Governing Council has decided to leave the current value unchanged at an annual growth rate of 4½% for the broad aggregate M3.