. 3 the committee must take action to avoid this outcome, specifically through the committee ’ s standards implementation group ( sig ). the sig is initiating this year a peer review process, through which teams of experts will assess the extent to which countries have implemented basel committee standards. while these reviews will focus initially on standards other than capital, such as stress testing, the process should nevertheless provide insight into how approaches and outcomes related to the implementation of basel iii can be meaningfully monitored and compared. the sig has already begun sharing information on the status of basel iii implementation by member countries and is in the early stages of planning comparative work on risk - weighted assets across jurisdictions and banks to promote consistent implementation. as the basel committee moves into this next phase, we will urge the committee to take a comprehensive approach to monitoring processes that includes three elements. first, the committee should begin work as soon as possible to develop mechanisms to implement effective cross - country monitoring. second, this process should go beyond traditional stocktaking exercises to include a careful assessment of the methodologies national regulators use to determine the appropriateness and acceptability of bank practices. third – and here is where the real work will lie – the committee must develop a mechanism to validate the actual risk - weighted assets calculated by individual banks under international capital standards. there are several possibilities for conducting this work. one that has been discussed in the basel committee would be to use tools such as benchmarks and test portfolios, in order to provide an accurate, quantifiable comparison of standards implementation across jurisdictions. another, more far - reaching option would be to use validation teams working under the auspices of the basel committee itself to verify the methodologies used at individual banks to ensure their compliance with international standards. they could use expertise gained through horizontal reviews of institutions to make assessments of individual banks in different jurisdictions. a less far - reaching variant of this option would entail national supervisors collaboratively participating in examinations of specific institutions. as a result of these monitoring and validation processes, outliers ( i. e., banks whose risk weights for comparable assets differ materially from those of other banks ) could be identified so that national supervisors might perform more in - depth analyses of their banks ’ processes and outcomes. this would lead to a greater understanding of the disparity in results for certain institutions or jurisdictions based on their assumptions, data, or risk profiles. there can be legitimate reasons that banks may have different risk estimates for similar portfolios. where di

the financial markets and maintain financial stability. q & a session : david marsh ( managing director, omfif ) : it is sometimes said that there is a vacuum in leadership in the world. do you think it is about time for china to take a greater leadership role in the international monetary reforms? you mentioned a number of very positive developments in your speech regarding the chinese economy. it seems to provide a good platform for china to push forward some ideas about the reform of reserve currencies, the role of the sdr, institutionalizing the swap, and so on. 2 / 3 bis central bankers'speeches zhou xiaochuan : in recent years, along with rapid economic development, china has started to play a role in the international economic governance, including participating in the reform of reserve currency system and policy making in trade and financial stability. but china is still focusing very much on the domestic agenda, including further promoting economic development and regulatory reforms so as to keep pace with global development. we are pleased to see that imf has included the rmb into the currency basket of sdr. it ’ s encouraging and it will prompt china to adopt more reform and opening up policies, and support rmb to serve better as a freely usable currency. although china has strengthened cooperation with the international organizations, such as imf, bis and fsb, and participated in standard setting and rule making, we still have a long way to go in order to play a more significant role. as for the currency swap, it is an unexpected outcome of the global financial crisis. after the outbreak of the global financial crisis in 2008, due to the shortage of hard currencies and the difficulties in developing correspondent banking relationship on the part of commercial banks, some neighboring countries requested to enter into local currency swap agreements with china, in order to support and facilitate regional trade. we first signed an agreement with south korea, then with some asean countries and central asian countries. later on, the swap arrangements gradually expanded into other parts of the world, such as argentina, ukraine and egypt. therefore, currency swap arrangement is an unexpected outcome of the global financial crisis. china supports the further development of global safety net. in our view, the global safety net may be more efficient than bilateral arrangements. william r. rhodes ( william r. rhodes global advisors, inc. ) : last year, you expressed concern about the growing debt to gdp ratio. but you sound fairly optimistic about the issue this year. it seems that the government