furthermore, each institution would feel penalised for making a contribution towards ensuring a more cautious management of the financial risks resulting from property finance. what, then, needs to be done? in the case of real estate loans, we want the basel framework to take due account of reliable data series on low loss ratios, as they result from conservative valuation methods in germany. this, of course, affects all methods of calculating regulatory capital for credit risks. above all, internal models are already able to convert data on low loss ratios into low risk weights. we therefore call for the following. first, the basel committee should apply far fewer restrictions to the advanced approach, airba1, than originally intended. second, the input floors, ie the restrictions on model parameters, which are estimated using loss data, should not be set as high as in the current proposals. third, the same logic applies to the f - irb2, a less comprehensive internal model in which certain loss ratios are already stipulated by regulation. the bundesbank therefore proposes that the capital requirements should be lowered when both the institutions and the supervisors can provide reliable past data on low losses and stable markets. this method is 2 / 4 bis central bankers'speeches known among experts as the hard test. fourth, the hard test should be kept in the standard approach for calculating credit risks. 3. risk sensitivity as a measure for the conclusion of negotiations ladies and gentlemen, as part of the negotiation process, the bundesbank is committed to ensuring that these regional differences are given due consideration. at the end of the day, the ultimate objective of the reforms needs to be ensuring the risk sensitivity of the framework, meaning that the capital requirements reflect the actual risks of an institution as accurately as possible. for the basel committee, this also means looking at more than just the global average increase in capital requirements and focusing on a regional balance as well. the german representatives in basel are not alone in this quest, but work in close cooperation with other negotiating parties. we are grateful to have the strong support of the ecb on this matter. that is why i am very pleased that daniele nouy will be giving the dinner speech tonight. specifically, we will be bringing the following points to the negotiations. 1. the supervisory lgd under f - irba needs to be reduced from 45 % to 40 %. 2. the scaling factor of 1. 06, a remnant of the basel ii rules, should also be abolished. 3. the bundes

struck by the remarks of congresswoman stephanie tubbs - jones at the small business development conference sponsored by the federal reserve bank of cleveland in may 2002. she described her mission in congress as creating jobs. having worked on capital hill for many years, i can tell you that this outlook was not common among elected officials thirty years ago. the understanding that sustainable communities are as dependent on the creation of good jobs as they are on the availability of decent, affordable housing is, i believe, a relatively new construct in our political discourse. economic development is now commonly understood to be an essential component of successful community development strategies. as the role of large industrial and manufacturing firms in the overall economy declines, small businesses have become critical to creating jobs and economic growth. in fact, the small business administration reports that small businesses employ half of all private - sector employees and, more importantly, have generated 60 to 80 percent of new jobs annually over the last decade. in ohio, small business proprietors ’ income in 2003 increased by just over 10 percent, from $ 22. 3 billion in 2002 to $ 24. 5 billion in 2003. with numbers like these, it is easy to understand how economic development and small business growth also open the doors to the ownership society. good jobs with decent wages and benefits provide the basis upon which individuals can begin to save and invest. an essential building block of all economic development is investment, and when private investment does not provide enough capital to stimulate economic growth in a community, public / private partnerships become necessary. federal policies also help set the stage for lasting economic development by establishing a fair and transparent regulatory system. federal, state, and local governments promote economic development by providing access to capital and offering various financing options for new and emerging businesses. in addition, financial institutions and communitybased organizations provide capital to firms that qualify for their programs. federal, state, and local governments also provide valuable technical assistance to small businesses. providers of advisory services offer business owners a wide array of programs, including business plan development, market strategy design, and management strategies for growth. at the federal level, the sba cosponsors small business development centers and offers several other programs that provide valuable resources for small businesses as they develop and grow. the sba reports that last year 2. 44 million entrepreneurs received business counseling and technical assistance through one or more of the agency ’ s advisory training programs. the department of commerce ’ s minority business development agency ( mbda ) is another example of a federal initiative