Together with staff from the Secretariat of the Basel Committee on Banking Supervision and its member agencies, they have selected timely topics, invited speakers who have sparked our discussions, and encouraged informed public discussion and debate on these matters. At this half-way point on the conference agenda, I would like to take a few minutes to share with you the very good news that the Basel Committee reported last week on Basel II. I’d also like to add some thoughts from my perspective on the some of the issues you are discussing and especially their relevance to the new international capital framework. II. Summary of 12 May 2004 press release  As you will probably know, the full Committee met just last Tuesday, actually in a conference room not far from the auditorium where you are meeting. Tuesday’s meeting may have been one of the most historic for the Basel Committee. Three results make this meeting especially significant in my view. First, and most important, we achieved consensus on the remaining outstanding issues that we faced in our efforts to revise the international capital framework.
I believe that it will lead to a more optimal implementation of the new framework. Furthermore, possible concerns about competitive equality can be alleviated thanks to the existence of temporary capital floors. The third significant result of last week’s meeting is that the Committee agreed on the way forward for the implementation and evolution of Basel II. The framework and timetable have been agreed. Yet we have much hard work still ahead of us, as the implementation of the rules will be a challenging task and also because we have recognised that the Basel II approach is intended to be evolutionary. At our meeting, the members of the Committee discussed several implementation issues that we will “iron out” in consultation with other supervisors and the industry. This includes finding ways for home and host jurisdictions to coordinate and cooperate when applying the new rules to banking organisations that are active in multiple jurisdictions. More than ever before, supervisors will need to work together to reduce the regulatory burden on banks and to conserve supervisory resources. We also face some difficult technical matters. For example, the Committee’s press release noted that we must determine acceptable methods for banks to estimate a key driver of credit risk. Banks that adopt the advanced internal ratings-based approach to credit risk will be required to estimate how the loss-given-default parameter for borrowers may vary when the economy experiences a downturn.