While emerging market economies may have different timelines and priorities, rigorous training programmes need to be simultaneously pursued to ensure that the supervisors are able to fully understand and interpret the qualitative materials, and at the same time, are able to comprehend the broader supervisory issues and concerns. Ladies and Gentlemen, The benefits of Basel II cannot be fully realised if emerging countries do not have the necessary foundation for effective implementation. In reality, some developing and emerging countries still need to develop a more efficient and comprehensive legal, accounting, regulatory and market infrastructure. The challenge for the emerging economies is therefore to place high priorities towards establishing and strengthening the fundamental infrastructure. Without the proper foundations in place, this could pose impediments to the implementation of Basel II, in addition to inhibiting the proper implementation of cross-border regulations and the effective conduct of consolidated supervision. In emerging countries where the necessary infrastructure is already in place, supervisors need to look beyond the state of the current financial landscape, in the context of the globalisation of financial services, and integration with the international landscape. Against this backdrop, the appropriate regulatory framework for the banking industry, in particular, the future of cross-border supervisory arrangements, needs to be articulated. In this regard, it is also important to recognise that the challenge of cross-border banking in the context of the increased significance of international banks has far wider implications.

The concordat recognised the greater roles of host supervisors for supervising foreign banks that operate via locally-incorporated subsidiaries. Some home country supervisory in fact referred to the host supervisor as the banks' "intermediate home supervisor". The framework also recommended a high level of reliance by host supervisory on the works undertaken by the home supervisors in their oversight and monitoring of the soundness of the foreign banks' branches in their jurisdictions. These important principles have become the foundations for the current cross-border supervisory framework and have been the basis for the formulation of the HighLevel Principles for the Cross-Broader Implementation of the New Accord issued in 2003. The Principles have sought to further reinforce the responsibilities of home supervisors in conducting consolidated supervision of financial conglomerates and the greater expectation on host supervisors in the supervision of individual subsidiary banks in their country. The new capital accord is yet another significant development that would challenge the robustness of the cross-border banking framework and principles. The real test would be in translating the principles into detailed policies and action plans that are both sound and practicable. The main challenge in applying the new accord uniformly across the globe is, indeed the complexity of the framework itself. While the underlying intention of the framework to promote sound risk management and best practices is not in question, countries, particularly the emerging markets, are at different levels of readiness to cope with the extensive changes and potential implications of Basel II.