The Committee also continues to consult actively with banking industry representatives and organizations through holding seminars, inviting presentations at working meetings, and conducting surveys on various topics. The Consultative Paper represents an evolution in the Basel Committee’s approach to capital adequacy. In addition to establishing minimum capital requirements, the paper places an increased emphasis on the supervisory review of capital adequacy and the role of market discipline. We refer to these elements as the “three pillars” of our proposed capital adequacy framework, which together promote safety and soundness. This evolution in the Committee’s thinking about capital follows from much of our recent work on risk management and the surveys we have conducted on banks’ disclosure practices. In our view, the three pillars to assess capital adequacy are mutually reinforcing, each addressing the challenge of aligning capital relative to risk in banking organizations somewhat differently. The Committee’s belief is that by combining the approaches of the three pillars, we can better achieve our overall objective of ensuring an adequate capital cushion across the banking system that at the same time recognizes and encourages prudent risk management. BIS Review 126/1999  4  Let me highlight briefly each of the three pillars and provide some perspective on the key challenges that the Committee faces in relation to each. The first pillar has to do with minimum capital requirements. The 1988 Capital Accord allowed supervisors in the G10 countries for the first time to use a common yardstick for measuring the capital adequacy of banks.

Niklaus Blattner: Developments in the Swiss banking sector Introductory remarks by Mr Niklaus Blattner, Vice-Chairman of the Governing Board of the Swiss National Bank, at the half-yearly media news conference, Berne, 16 June 2005. *  *  *  With its Financial Stability Report, the Swiss National Bank (SNB) informs the public of the state of the financial system and presents its assessment of system stability. Moreover, the Bank provides indicators that may be used for an in-depth analysis. The SNB tracks developments in the banking sector from a macroprudential, i.e. a system-wide perspective. In so doing, it complements the task of the Swiss Federal Banking Commission (SFBC), which is responsible for microprudential oversight, i.e. for individual institutions. The part of the report that focuses on the banking sector mainly highlights strains or imbalances which could pose a threat to system stability in the short or longer term. In addition, the SNB reports on its activities in connection with the oversight of payment and securities settlement systems. This year it also provides information on the “Business Continuity Planning” (BCP) project, i.e. on preventive measures to overcome disruptions, thus strengthening the operational resistance of the Swiss financial centre. Banking sector The banking sector is currently stable. The stress index developed by SNB – an indicator which combines comprehensive information on potential stress symptoms in the banking industry – shows that the strains on the Swiss banking industry were extraordinarily low compared with the historical average. This is mainly attributable to three factors.