been extended to other areas, such as the review of the basel committee core principles for effective supervision, in which hong kong is heavily involved. successful implementation of basel ii depends not just on the standard - setters and the regulators, but also on the banks themselves. the enthusiasm with which the hong kong banking community has taken to basel ii has been impressive. as a senior member of this community, our discussant today is particularly well equipped to provide the perspective from the banks. we are fortunate in having secured david eldon ’ s presence today. after more than 40 years in banking, many of them in hong kong, he is about to retire from the field. he is thus currently much in demand among his many friends within the financial community, who wish to fete him on his retirement. he is also receiving bookings in his new, risk - taking career as popular singer and entertainer – a field in which we wish him every success. i take this opportunity to pay tribute to david for his outstanding contributions to hong kong during difficult and challenging times, not just in the financial sphere, but also in the many community and charitable activities in which he is involved. ladies and gentlemen, it is an honour to welcome governor jaime caruana as speaker, and mr david eldon as discussant. i now have much pleasure in inviting governor caruana to deliver the seventh hkma distinguished lecture.

the new accord, but also because this city has one of the highest concentrations of banking institutions in the world, with a strong presence of international banking groups. many people all over the world have been involved in basel ii. but there is no - one more qualified to speak on the subject than our guest today. governor caruana is the current chairman of the basel committee on banking supervision. he is also governor of the banco de espana, and a member of the governing council of the european central bank. governor caruana has extensive experience in both the private and public sector in spain, and is the author of several publications on the spanish financial system. we are greatly honoured that he has accepted our invitation to speak on basel ii today. the basel ii project was already several years old when governor caruana took over its leadership, as chairman of the basel committee, in may 2003. but he has put his own stamp on this project, and has made three special personal contributions. first, he has brought the formulation process to a successful conclusion with the publication last june of the definitive document on the revised framework. producing this necessary road - map was no easy achievement given the differing views that had to be taken into account, and the considerable degree of scepticism in the industry. secondly, he has, through persuasion and advocacy, managed to convert scepticism towards basel ii into a positive and constructive attitude. he has done this in particular by stressing that, when you look beneath the surface, basel ii is not so much about how capital adequacy ratios are calculated, as about how banks can improve their risk management and, thereby, how the efficiency of the banking system can be improved. he has also placed emphasis on the point that basel ii applies not just to advanced banking systems but to banking systems in all stages of development – an observation of particular relevance to this region. thirdly, and of no less importance to us in hong kong, governor caruana has personally supported greater involvement by non - g10 members in the basel ii process. within this region, central bankers have been increasingly active in recent years in trying to ensure that our voice is heard in the process of policy formulation and standard - setting in basel. governor caruana has on a number of occasions spoken out on the need to ensure that our voices are indeed heard, and that our views are actually taken into account. and there are signs that this practice is turning into a tradition : it has