The Basel Committee on Banking Supervision has announced a new implementation group for the proposed new Basel Capital Accord, and it unveiled plans for an impact study.

The committee is announcing the creation of the Accord Implementation Group, to be led by Nicholas Le Pan, Canada’s Superintendent of Financial Institutions. The group will serve as a means for supervisors to share information and approaches related to the implementation of the new Accord.

The committee says it is confident that its goal to finalize a new Capital Accord that builds on and rewards sound risk management practice can soon be achieved. It now plans to undertake an additional review aimed at assessing the overall impact of a new Accord on banks and the banking system before releasing the next consultative paper.

Its work during this “quality assurance” phase will focus on three issues:

  • balancing the need for a risk-sensitive Accord with its being sufficiently clear and flexible so that banks can use it effectively;
  • ensuring that the Accord leads to appropriate treatment of credit to small- and medium-sized enterprises, which are important for economic growth and job creation; and
  • finalising calibration of the minimum capital requirements to bring about a level of capital that, on average, is approximately equal to the requirements of the present Basel Accord, while providing some incentive to those banks using the more risk-sensitive internal ratings based system.

The committee had previously planned to undertake a comprehensive quantitative impact study simultaneously with the next consultation period, but now believes that performing the impact assessment first will help to make the consultation period more constructive.

Undertaking this additional review means that the committee’s next consultative paper will not be issued in early 2002, as previously indicated. Instead, the committee will first seek to specify a complete version of its proposals in draft form.

Once a draft version of a fully-specified proposal has been completed, the committee will undertake a comprehensive impact assessment of the draft proposal.