The Basel Committee on Banking Supervision has issued its second consultative paper on the new Basel Capital Accord. The Committee introduced the current Accord for internationally active banks in July 1988 (1988 Accord). The first consultative paper revising the 1988 Accord was published in June 1999 (see www.lawdepartment.net/global "Credit risk management", GC, 2000, V(10), 69 ). The proposed new framework is intended to align the regulatory capital requirements more closely with the underlying risks and to provide banks and their supervisors with several options for the assessment of capital adequacy. EU legislation will reflect the Basel process but, because it will include investment firms and not just settlement banks, it will be wider in scope and will take account of the particular nature of the EU banking and investment environment (see "Capital adequacy framework" in this section). It is anticipated that the new EU legislation and the new Accord will be implemented at the same time.The Committee has said that it intends to finalise the new Accord by the end of 2001 and to implement it in member jurisdictions in 2004.
Source: Basel Committee on Banking Supervision press release, 16th January 2001; FSA press release, 16th January, 2001. The second consultative paper "The New Basel Capital Accord" is available at www.bis.org Responses are required by 31st May, 2001. Lovells