the influence that other marketplace participants can bring to bear on a bank to manage its risks appropriately. by enhancing transparency in a bank ’ s public reporting, counterparties, rating agencies, and even customers will have better access to timely and meaningful information about a bank ’ s activities and exposures. they will, in turn, be better able to make business or investment decisions. that will help markets to reward banks that manage their risks judiciously while penalising those that do not. by matching the minimum capital requirements with a robust supervisory review and enhanced financial transparency, the committee is embracing a philosophy of incentive - based supervision that will encourage banks and supervisors to focus on the quality of their risk management processes. so the basic three - pillar structure of the new accord is rather simple to explain. the challenge lies in specifying principles and rules for banks and markets of many sizes and shapes. the members of the committee viewed this challenge as an opportunity to advance the state of the art in risk management worldwide. just over the past few months we have resolved some of the most difficult technical issues that arose in recent discussions with the industry. this brings me to the status of our work today, my second topic. the status of the new accord to test the quality of our proposals, and to ensure that our new framework would be more sensitive to risk and would create incentives for advances in risk management, the basel committee has undertaken three global public consultations. the third consultation concluded last summer attracted over 200 comments from the industry and the public. we ’ ve also conducted massive impact studies, gathering detailed information from over 350 banks worldwide on how the new rules would affect their capital requirements. this public consultation process and our series of impact studies would have been impossible without the tremendous support, candour, and hard work that so many banks and other organisations worldwide offered. i would like to express my thanks to the many organisations in north america that, together with peers from around the world, wrote comment letters, participated in discussions, and provided data to the committee. you have helped us to ensure that the proposals reflect best practices. your suggestions have helped us to clarify and simplify the proposals. thanks to your hard work, and thanks to the cooperation and support from many supervisory agencies and central banks, we are confident that the new accord will represent the best possible framework. in last summer ’ s consultations, the industry acknowledged the many improvements in the proposals that we have achieved to date. at the same time, public comments identified

that will help all of us to consider the work ahead and make us even better prepared for the implementation of the new accord by the end of 2006. indeed, those of you in the audience from institutions that anticipate adopting the most advanced approaches available when the new accord is implemented have already begun to collect and process the necessary data. you know, as well as anyone, that the required commitment is substantial, and that supervisors ’ expectations are high. reading the results of the global basel ii survey conducted by garp during the month of january, presented in your monthly newsletter, i was encouraged to see that “ most financial institutions ( 77 % ) across the globe are confident that they will achieve full compliance with the basel ii risk - capital accord in time for the 2006 implementation deadline. ” perhaps even more important is the conclusion that “ these institutions are confident that their internal risk management will be at least somewhat improved ( 86 % somewhat or greatly improved ) following the rollout of basel ii ”. this is why i think that what you will discuss at this conference mean much more than simply complying with new regulations and calculating capital requirements appropriately. we want banks to manage risks, not to manage basel ii. the essence of basel ii is not just the set of rules and formulas to calculate regulatory capital, these are necessary and very important but, in my view, the heart of basel ii is the incentives for banks and risk management professionals to advance risk management and the recognition of this progress. studying and understanding the drivers of credit, market, and operational risk, and probing the relationships between them, will help all of us to get a better sense of the risks and rewards we face today, and how well we are prepared to navigate changes in the landscape of opportunity and challenge tomorrow. improving our understanding of risk, and strengthening our ability to manage it, offers the promise not just of better administered banks, but more importantly the promise of a more stable financial system one that is better able to serve as a source of credit and sustainable growth for businesses and consumers alike. thank you again for welcoming me to this conference, and i offer my best wishes for an enjoyable and educational event.