roger w ferguson, jr : basel ii - scope of application in the united states speech by mr roger w ferguson, jr, vice - chairman of the board of governors of the us federal reserve system, before the institute of international bankers, new york, 10 june 2003. * * * i am delighted to join you today as you gather for your annual general meeting of the institute of international bankers. larry uhlick suggested that i might provide an overview of key trends and developments in the regulation and supervision of internationally active banks. basel ii, of course, is the key issue today, and given that the u. s. agencies'position on scope of application has clear implications for your banks'operations in this country, choosing basel ii and its scope of application in the united states as my topic was not difficult. as you all know, basel ii refers to the proposed new capital accord developed by the basel committee on banking supervision. the committee's third consultative paper was issued for public comment about six weeks ago, and the u. s. agencies plan to issue their preliminary proposals for implementation in this country next month in an advance notice of proposed rulemaking ( anpr ). at the same time, the u. s. authorities will release the first of a series of draft supervisory guidelines to assist bankers in understanding what supervisors will be expecting of u. s. banks. the agencies are actively seeking comments on all these documents. it is not too late to shape basel ii's final form or the way it will be implemented in this country, provided that comments are directed at the way to improve methods and procedures for obtaining the same objectives. we are open - minded and are willing to make changes that meet such criteria. even though the u. s. anpr has not yet been released, the authorities have already made known their intended scope of application in this country : which banks will be required to apply basel ii, which banks may choose to adopt the new accord, and which banks may choose to remain under basel i. this decision is of particular interest, i would think, to this audience because it raises the risk that nonu. s. banks will be required to operate in the united states under rules that will differ from those that apply to their parent bank in their home country and affiliated banks in third countries. i hope that, by the time you leave this room, you will see that such potential conflicts are more apparent than real. scope of application in the united states the major goal of

measures were unthinkable four years ago. today, euro area heads of states or government agreed in brussels to move towards a stronger economic union. this implies measures in two directions, namely : a new fiscal compact and strengthened economic policy coordination and the development of the euro area stabilisation tools to face short term challenges. in the view of the ecb ’ s governing council, a new fiscal compact comprising a fundamental restatement of the fiscal rules, together with the fiscal commitments that euro area governments have made, is the most important precondition for restoring the normal functioning of financial markets. to accompany fiscal consolidation, bold and ambitious structural reforms are essential. they should be immediately carried out to help the euro area countries improve competitiveness, increase the flexibility of their economies and enhance their longer - term growth potential. we at the ecb take our responsibilities. monetary policy in the euro area will remain dedicated to our mandate, which is to maintain price stability over the medium term. the policy measures taken by the ecb have resulted in the governing council ’ s outstanding bis central bankers ’ speeches record during the past 13 years in terms of price stability and anchoring of inflation expectations. the ecb will continue to remain an anchor of confidence and stability, in a global economy characterised by marked uncertainties. this is the central contribution we can make to foster sustainable growth, job creation and financial stability in the euro area as whole. thank you for your attention and i wish you all a fruitful and enriching conference. bis central bankers ’ speeches