In order to give you our perspective of implementing Basel III, I would point out that our Banking Control Law (BCL) already provides for a clear definition of capital and also provides for legal capital, liquidity and leverage ratios and limits on large exposures. The BCL also allows SAMA to introduce appropriate and relevant international standards such as those emanating from the Basel Committee or the Financial Stability Board. Over the years, SAMA has proactively introduced international standards and best practices in Saudi Arabia to ensure that the Saudi Banks are well managed, adequately capitalized and effectively governed. This is also reflected in the safety and soundness of individual banks and the resilience of the overall banking system. In line with its stance, SAMA was among the first group of non Basel Countries at that time to introduce Basel I framework in 1992 and the Basel II in January 2008. While Basel I was crucial for the introduction of the concepts of risk sensitivity of banks’ assets and tier-1 and tier 2 capital, Basel II introduced us to the concepts of internal risk rating systems and risk modeling. From SAMA perspective the greatest value in introducing Basel II was the significant progress that banks have made in four areas. Firstly, with the introduction of the Internal Capital Adequacy Assessment Plan(ICAAP), they have improved their capital planning process. ICAAP requires banks to align their business plans with their risk appetite and risk profiles in projecting their capital over the medium term.

Bank of France reports industrial output continued to make progress in June 1997 BANK OF FRANCE, MONTHLY BUSINESS REVIEW, June 1997. According to the business leaders surveyed by the Banque de France, industrial output continued to make progress in June. Output of consumer and intermediate goods advanced significantly, with a more moderate increase for capital goods, whereas it levelled out in the food-processing industry and slightly dipped in the automobile industry. Capacity utilization rates recovered. Overall demand strengthened both in France and abroad. Export sales grew considerably, in particular to Great Britain, Italy and the United States. Domestic demand rose, stimulated to some extent by inventory replenishment. Order books seem generally satisfactory. While they have emptied out somewhat in the food processing industry, they remain on the full side in the capital goods sector. Inventories are only just above desired levels, despite an increase in the consumer goods sector, and above all in the automobile and food processing industries. In the coming months, activity is likely to intensify across the board, except for the automobile sector which is expected to stabilize. Overall, raw material and finished goods prices changed little. The cost of supplies climbed in certain branches of the intermediate goods sector, mainly due to the rise in the dollar, although these increases were not passed on to sales prices. Business managers continued to take a cautious stance on investment. The little capital expenditure there was primarily concerned the modernisation of equipment and bringing it into line with standards.