Ongoing work in the Basel Committee to ensure that the new framework functions as intended  Let me turn now to the ongoing work in the Basel Committee to ensure that the new framework functions as intended. I would like to report on the current status of two initiatives that were announced by the Basel Committee some time ago: the treatment of “double default” and trading book issues; and the work to re-confirm that the new framework meets our objective to broadly maintain the aggregate level of capital requirements, while also providing incentives to adopt the more advanced risk-sensitive approaches. Before I turn to the detail, let me say that neither initiative is expected to lead to significant changes in Basel II’s overall structure. However, the Committee has always said that Basel II should be sufficiently dynamic to allow for evolution. As I have already stressed, we must ensure that Basel II serves the needs of the banking sector into the twenty-first century. In this regard, the Basel Committee has pledged to monitor industry developments and to continue its public dialogue on emerging issues that are relevant to capital supervision. The Basel Committee has already begun to honour this promise, in two areas especially.
While we have completed a vast amount of work in developing the international standards, we cannot rest yet. The ultimate success of Basel II still demands a high level of dedication and energy from all of us. I commend and thank the members of the European Parliament for their contributions to the international discussions on Basel II and for their hard work in European discussions on the Capital Adequacy Directive. I know that you will give the directive careful consideration, taking account of the global environment in which European banks are operating. I would like to pledge any assistance that members of the European Parliament believe may be necessary and I would be honoured to participate in future parliamentary discussions on Basel II and the Directive. The considerable efforts that the European Parliament, the Council, the Commission and the Committee of European Banking Supervisors have already demonstrated give me great confidence that we will achieve our goals. Our citizens, businesses and banks deserve nothing less than the promise and benefits of greater financial stability and more sustainable economic growth. BIS Review 3/2005  5