, with advances in regulation and supervision being incorporated as experience was gained in applying them. the committee therefore decided that, in order for the core principles to remain a fully effective, flexible and globally applicable standard, the time had come to update its content. of course, the changes that have taken place since 1997 also include basel ii. however, i would like to point out that the committee has explicitly stated that, despite the advisability of moving towards basel ii, full and strict implementation is a decision that rests solely with the authorities in each country, and that it may not be the first priority for some countries. consequently, it is not the committee ’ s intention to use the update of the core principles as a way of dragging countries towards basel ii implementation. the revised framework is in no way a necessary prerequisite for compliance with the revised core principles, even though, as i have just said, i think there are powerful reasons for holding basel ii up as the direction in which regulation and supervision should be moving. the revision followed two basic directions. the first was to limit the changes to those aspects that were essential and key to maintaining the effectiveness of the core principles without removing the continuity and comparability with the previous standards. examples of these essential changes are the inclusion of a new “ umbrella ” principle recommending that banks have integrated risk management systems, which covers all the aspects common to the various types of risk. in the same vein, the emphasis has been placed more on risks that received less attention in the existing version of the core principles : interest rate, operational and liquidity risks. finally, it should be noted that the criteria on the prevention of money laundering and terrorism financing have been updated. thus the revision does not call into question the work carried out on the basis of the 1997 principles, or indeed the planning of reforms on that basis. neither is there an urgent need to update the assessments ; in this respect, one should stress the validity of the self - assessments carried out by the countries themselves, as a complement to the assessments performed by the fund and the world bank during their fsap missions. the second general direction followed by the core principles revision was to keep their character of a single universal standard for assessing the quality of banking supervision, independently of the complexity of each country ’ s financial system. to maintain this universality, on the one hand, it was decided to place greater emphasis, throughout the text, on the idea that the principles should be applied proportionally,

jaime caruana : implementation of basel ii and other key issues relating to banking supervision in latin america and the caribbean opening speech by mr jaime caruana, governor of the bank of spain and chairman of the basel committee on banking supervision, at the joint meeting of the fsi and asba, miami, 25 april 2006. * * * introduction first of all, i would like to thank rich spillenkothen and josef tosovsky for inviting me to participate in this joint meeting of the fsi and asba, during which we will be able to discuss various key issues for banking supervision in latin america and the caribbean over the next few years. two things are evident from the agenda. the first is that there are a large number of key topics to discuss today and tomorrow, which demonstrates the importance and timeliness of this meeting, which i am sure will be fruitful for all concerned. the second is that basel ii continues to be a central and priority topic for supervisors and the banking industry alike, as evidenced by the presence here today of major banking representatives, whom i would also like to thank for attending. it is well known that the committee has devoted a large part of its efforts over the past few years to first developing and then implementing the revised capital framework. today, we have the opportunity to debate different aspects relating to its implementation and application. once the phase of theoretical debate and standards drafting had been completed, the committee ’ s activities, in particular through its accord implementation group ( aig ), focused on implementing the framework. the time has therefore come to confront this practical reality, with all its difficulties and problems, through a dialogue with the industry and the global supervisory community. this is a major task, given that the aim is to strengthen banking systems and the international financial system, rendering them more robust, more stable, and thus more capable of contributing effectively to the growth and stability of our economies. despite the importance of basel ii, the proposed agenda also shows us that this is not the only topic currently of interest to the supervisory community. tomorrow, we will be discussing one of the committee ’ s key projects, which, i am convinced, affects all these supervisors gathered here today. i am referring to the basel core principles. with these introductory words, i would like to provide a general overview of the committee ’ s work in these areas. first, i will focus on the revision of the basel core principles, before moving on to talk about the implementation of the revised framework