to five years, and i would like to begin with a brief look back to recall why bankers and supervisors decided that a new basel accord was needed. then, i ’ d like to share with you the latest news on consultations with the industry and the committee ’ s most recent decisions on the way forward to finalise, and then to implement, the new rules. there is still much to be done : i ’ ll discuss as examples our efforts to reduce the complexity of the rules ; to ensure that they are sufficiently risk - sensitive without being overly conservative ; and to maintain a level playing field. finally, i ’ ll conclude with thoughts on some longer - term and future efforts that the committee may undertake to continue to align the system of supervision with the best practices of leading institutions and practitioners worldwide. a look back as we resolve the final questions and complete the text of the new accord, it ’ s important to remember why all of us put our best into its success. the existing accord was already considered a milestone achievement in banking, as it offered the first internationally accepted “ yardstick ” for capital adequacy and a simple measure of risk. it had received praise for reversing a downward trend in bank capital levels and for serving as a benchmark measure of a bank ’ s financial health around the world. but the 1988 accord was a blunt instrument that quickly fell behind the times. innovations in technology, in banking products, and in risk management techniques changed the way that leading banks measure and manage their risks. by the mid - 1990 ’ s, bankers and supervisors agreed that the original accord no longer provided a meaningful measure of risk for the largest and most sophisticated organisations. as a result, by the late 1990 ’ s the basel committee and leading institutions worldwide began discussions on ways for supervision to incorporate more sophisticated and sensitive measures of the risks that banks face. the initiative for these discussions can be attributed above all to william mcdonough, who was until recently the president of the federal reserve bank of new york and my immediate predecessor as chairman of the committee. bill brought intellectual leadership, demanding standards, and tireless energy to a project whose size and implications became apparent only after bankers and supervisors had taken a long, hard look at how much the art of risk management had advanced in the short years since 1988. throughout the five years of work on the new accord, bill mcdonough convinced leaders in the industry, in central banks, and in supervisory agencies that merely updating the rules would

”. in practical terms for the esrb this means finding the right balance in issuing warnings and recommendations. too few warnings entail the danger of missing systemic risks. conversely, too many warnings could be missed by the addressees. 5. sixth and seventh sybilline book : taking into account the global economy the sixth message of the sibylline books might read as follows : “ be aware of relevant developments outside your own region. ” financial stability is a systemic and a global phenomenon. and as is well known global imbalances play an important role. the savings glut is seeking safe and high yield assets. and global players can help to solve the current crisis in europe. sometimes, international investors ask me, “ why should we buy bonds from sovereigns in crisis if their european partners are unwilling to do so to a larger extent? ” my answer is “ look, the european partners have to be aware of moral hazard implications, because they are players in the european political game, ” the game, which is reminding us of the story of the purchase of the sybilline books. investors outside europe need not take into account moral hazard implications. they can and should buy such bonds because they have confidence in the long - term sustainability of the fiscal position of the countries in question, and because they are interested in portfolio diversification. progress in the various countries can be seen in ireland, for example, but also in italy, where the new government is going to implement fiscal measures. they can build on what is essentially a sound economy. therefore, my seventh and last message is this : “ european sovereigns deserve more confidence than markets are currently willing to give them. ” these are seven of the possible messages of the lost or burned sibylline books. the remaining messages may be “ known unknowns ” or “ unknows unknowns ”. thank you. bis central bankers ’ speeches