other things, basel ii implementation issues. in addition, the aig has encouraged non - g10 supervisory participation in working groups that are addressing issues related to validation and operational risk. the aig has also engaged in encouraging work with non - g10 supervisors to consider principles for information sharing among home and host supervisors. i believe that this dialogue will, over time, foster greater consistency among committee and non - committee members. the committee is therefore committed to heightening this dialogue and will consider further ways to promote consistency. thank you very much, and i look forward to your questions and comments. 3 / 3

jaime caruana : basel ii progress remarks by mr jaime caruana, governor of the bank of spain, at the institute of international bankers breakfast dialogue with government officials, washington dc, 26 september 2005. * * * thank you very much. it is an honour to be here once again for a productive dialogue with members of the institute of international bankers, and it is equally an honour to be on a panel with such distinguished colleagues from the united states and the united kingdom. i will keep my remarks as brief as possible so that we can have plenty of time for your questions and comments. it will probably come as no surprise that i will focus my remarks this morning on the same topic that i discussed with you last year : the new framework for capital adequacy, or basel ii. as you are probably aware, the basel committee published the basel ii framework in june last year. at that time, the committee indicated that while the framework was mostly complete, several important technical matters still needed further work. specifically, the committee determined that more work was necessary with regard to ( 1 ) elements of the trading book and the treatment of so - called double - default effects for hedged transactions ; and ( 2 ) the estimation of loss given default during periods of economic downturn. over the ensuing months, members of the committee and several of its working groups engaged in intensive work with industry participants — many of whose institutions are represented here today — to develop practical and prudent solutions in these areas. in addition, i am pleased to note that we worked very closely with our colleagues in the international organization of securities commissions in the areas of trading book and double - default. in july this year, the committee issued guidance in both areas. with the publication of these documents on trading book / double - default and downturn lgds, the committee has concluded the policy development stage of basel ii. the industry has voiced the opinion that, while it could be possible to continue refining the framework, it is more important that there be a pause to allow banks to implement the framework. i very much support this view. our priority now should be to achieve high - quality implementation. a good example of how we, industry and regulators can collaborate, without the need to add additional rules, is what we did in the case of low - default portfolios. several types of portfolios may have low numbers of defaults or a bank may not have sufficient loss experience of its own ( e. g. portfolio