The original Basel Capital Accord was itself a landmark event, revolutionary in providing a common capital assessment approach, now used by over 100 countries. However, it has obvious limitations that have become more significant over time. It has become less and less reflective of the risks of our largest organizations, and, accordingly, has become less and less integral to our ongoing supervision of them. Basel I, as we all know, includes such shortcomings as: a) its failure to recognize differing credit quality within the same general asset type; b) its varying the capital charge with the credit exposure’s legal form, such as whether it is on or off balance sheet; and c) its simplistic approach to risk transference and credit risk mitigation. More generally, Basel I was not structured to keep pace with the rapid rate of financial innovation that we have seen in internationally active banks. It clearly has created incentives for capital arbitrage, with banks able to structure transactions with the primary goal of minimizing regulatory requirements without a commensurate reduction in risk. Similarly, it has resulted in distortions in bank activity, by creating a tax on certain activities while understating the risk for others. BIS Review 35/2005  1  These have combined to make the regulatory capital metric less informative to investors, supervisors and counterparties, and have eroded the principle of adequate risk-based capitalization that the Basel Accord was designed to promote.
All reporting institutions are invited to provide comments and views on the draft which may be organized through relevant licencing authorities, self-regulatory bodies, industry associations or directly to Bank Negara Malaysia; and 2. second, I would also like to take this opportunity to remind all reporting institutions, that Bank Negara Malaysia is increasing its supervisory and enforcement of AML/CFT compliance, in which we intend to pursue more deterrent action including taking appropriate enforcement actions under the AMLA, for any identified non-compliances, beginning 2020. As such we urge all reporting institutions present today to engage and discourse any compliance issues with the wide ranging of experts that we have lined up for this conference. With that, I wish everyone a fruitful discussion ahead and Selamat Menyambut Hari Kemerdekaan. 3/3  BIS central bankers' speeches