treatment of provisions and the valuation of financial instruments must keep pace with changes in the relevant accounting standards. the members of the committee believe that market discipline, and hence financial stability, is strengthened when accounting and disclosure requirements reflect sound risk management principles and are consistent with the control practices that banks adopt. consequently, we recognise our responsibility to participate actively in the development of national and international accounting standards. where the development of international standards is concerned, the committee and its member organisations devote considerable resources and staff time to sharing our perspectives as supervisors with those who make the rules. but the discussions between supervisors and accountants cannot be a one - way street. as supervisors on the basel committee have developed standards for the disclosure of components of capital, for loans, and for other topics of mutual concern, we have sought out the views of representatives of the accounting profession. this dialogue will continue. i should add that we are currently seeking new opportunities for discussion on issues of mutual concern with accounting standards - setting bodies and private sector accounting professionals. conclusion by the end of this conference, i think that we will all have a better sense of our many worthy accomplishments to date in refining the measures and management of credit exposures. at the same time, we will no doubt develop a better understanding of the significant work ahead – in terms of developing more sensitive capital requirements, but also in terms of advancing our ability to control the risks we face. with regard to the new accord itself, the issues and themes you will discuss at this conference suggest that we ’ ve moved beyond a discussion of the principles behind the rules to a focus on preparing for their implementation. this seems appropriate, since we expect that, given the very good progress that we have noted in banks preparing to adopt the new accord, supervisors and the industry will be ready to implement the new rules by the end of 2006. indeed, banks that wish to be among the first to adopt an advanced approach to credit risk should already have begun to gather and process the data that is key to the irb approach. adopting a more risk - sensitive treatment of credit risk will require significant work by all of us. what we learn about the factors driving losses from default, and how we can better measure and reduce our exposure to losses, means much more to all of us than simply a more favourable capital requirement. instead, our efforts on credit risk, combined with advances on the operational and market risk fronts, will advance our understanding of the many risks banks face and improve our ability to navigate them successfully.

, or “ aig, ” precisely to share experiences and encourage shared approaches. this group, which is chaired by nick le pan, the canadian superintendent of financial institutions, has already been long at work comparing notes on practical matters. we expect these discussions to help supervisors apply the new accord more consistently at home, thereby providing a more level playing field across countries as well. based on the aig ’ s work to date, the committee published a paper last august on the “ high level principles for the cross - border implementation of the new accord. ” in this paper, we reiterate our view that the traditional allocation of responsibilities to home and host supervisors will continue. cooperation will be critical for effective supervision under the new accord, especially considering the need for an internationally active bank to receive the approval to adopt, and then validate, advanced approaches to credit and operational risk at home and in host jurisdictions. similarly, supervisors will need to find practical ways to cooperate in the evaluations of capital adequacy under pillar 2 and ongoing reviews of compliance with the minimum operational requirements of the new accord. at the same time, pillar 3 - market discipline – draws on the power of markets to help ensure that banks do not hold unrealistically low amounts of capital for credit or operational risk. more generally, by emphasising principles in the rules – that internal measurement tools must be credible, that they must adequately capture risk, that they must be used by banks in the daily management of their operations and not just for regulatory capital purposes – enhanced disclosure and transparency may actually result in more consistency in the application of advanced approaches than detailed quantitative criteria. future work : full credit risk modelling the committee will spend the next few months considering these and other themes carefully and finding ways to balance the complexity of the new accord against the need for appropriate sensitivity to risk ; to ensure that the assumptions supporting the rules are appropriately conservative, but not excessively so ; and to apply the rules consistently to protect and promote competition in the global banking market. but when the ink dries on the new accord, rest assured that the basel committee will not be adjourning. just from the comment letters we received, we can already identify a wide range of issues ahead to continue to find new ways to advance risk management, to promote greater transparency, and to strengthen the stability of the financial sector. i ’ d like to conclude by mentioning just two of the potential items on our agenda for future work once the new accord is implemented.