Selecting Barcelona as the venue for ISDA’s discussions offers us a chance as well to celebrate the ancient and the innovative, the old and the new, in financial services. This conference, for example, will address some of the most sophisticated products in banking and finance and the risk management practices, legal developments, and technological advances that are emerging to support these new businesses. At the same time, our discussions here in Barcelona will remind us that we must all always monitor and control the fundamental – and traditional – risks involved in our activities. Credit risk, market risk, and operational risk have always been with us in various forms, although they have increased in complexity over recent years. What has changed dramatically, however, is our ability to measure and monitor those risks more comprehensively than our predecessors ever could. We have, moreover, improved our ability to manage or transfer those risks, and I would like to share with you today some thoughts on work underway in the financial community in this regard. There are three topics that I would like to address in my intervention. I will begin by sharing first, in my personal capacity, some thoughts regarding the need for standards to evolve and keep pace with the times, whilst ensuring that new standards are not unduly burdensome and do not hinder firms’ abilities to innovate.
In this respect, I’d like to look forward and address some of the work we are doing to ensure that the new international capital standard - Basel II - remains flexible and able to adapt to emerging practices and risks. Many of you have a very strong interest in the efforts the Committee is undertaking to consider how best to apply Basel II to certain trading-related exposures using the latest tools being developed by the industry. While this work is still ongoing, I would like to share a status report with you on that effort. Finally, I will highlight some of the work that we are undertaking to promote a smooth and consistent transition to Basel II, including our plans to conduct a review of the calibration of the framework, as well as our efforts in the field of supervisory co-operation and validation, and the key messages that are coming out of these initiatives. The evolution of standards and regulatory burden Allow me to begin by sharing some personal thoughts on a topic that has captured some attention recently: The view, held by at least some in the financial services sector, that the tide of regulation has risen to a high water mark. In my own conversations around the world, I have heard similar concerns from some bankers. Some point to the long debates that have taken place in the accounting  BIS Review 17/2005  1  profession.