jaime caruana : making diligent preparations for basel ii opening remarks by mr jaime caruana, governor of the bank of spain and chairman of the basel committee on banking supervision, at the thirteenth international conference of banking supervisors ( icbs ), madrid, 22 - 23 september 2004. * 1. * * welcome and overview distinguished guests and friends : as the governor of the bank of spain, it is my pleasure to serve as your host at the thirteenth international conference of banking supervisors here in madrid. i am also privileged to serve in a second capacity at this event as chairman of the basel committee on banking supervision. in that regard, it is my honour to launch our dialogue on the two main themes selected for this conference. as you know, the committee reached agreement on an historic revision of the international capital framework just this past june. so naturally an important focus for this conference will be on preparing for its implementation. in addition, because basel ii relies increasingly on the quantification of risk exposures to understand a bank ’ s risk profile, it is more important than ever before to look behind the numbers and into the rules that define how exposures are measured. the second day of our conference will be devoted to the emerging issues in accounting and their relevance to banking supervision. i am indebted to the secretariat of the basle committee, the staff of the bis, as well as to my colleagues at the bank of spain, for choosing speakers who will encourage a lively conversation on these two themes. in my own remarks this morning, i would like to open with some thoughts first on the implications of “ basel ii ” for banking supervision worldwide. while much has been said about its sophistication, i believe that many have overlooked key principles in basel ii that are relevant to all supervisors and all banks in all markets. in that regard, it is important to remember that basel ii ’ s success depends on a broad range of other preparations and measures that we undertake to strengthen safety and soundness ; in the second part of my remarks, i will offer some views on the other mechanisms, that lie at the heart of a sound system of supervision more generally. as i will mention, many of our safety and soundness goals are more easily achieved when supervisors apply these mechanisms more consistently : this makes it critical for the basel committee to continue to expand its ties and seek greater cooperation with the broader supervisory community. finally, i would like to close with some brief thoughts on the rules that govern

carl e. ( 2009 ). “ using monetary policy to stabilize economic activity ( pdf ), ” speech delivered at a symposium sponsored by the federal reserve bank of kansas city, held in jackson hole, wyo., august 20 – 22, pp. 245 – 96. warsh, kevin m. ( 2016 ). “ institutional design : deliberations, decisions, and committee dynamics, ” in john h. cochrane and john b. taylor, eds., central bank governance and oversight reform. stanford, calif. : hoover institution press. wheelock, david c. ( 2000 ). “ national monetary policy by regional design : the evolving role of the federal reserve banks in federal reserve system policy, ” in jurgen von hagen and christopher j. waller, eds., regional aspects of monetary policy in europe. boston : kluwer 4 / 5 bis central bankers'speeches academic, pp. 241 – 74. williams, john c. ( 2003 ). “ simple rules for monetary policy ( pdf ), ” federal reserve bank of san francisco, economic review, pp. 1 - 12. 1 i am grateful to joseph gruber and ellen meade of the federal reserve board for their assistance. the views expressed are mine and not necessarily those of the federal reserve board or the federal open market committee. 2 although the federal reserve was created in 1913, the institutional structure and governance that we have today date from 1935. see bordo ( 2016 ) and wheelock ( 2000 ). 3 it is true, though, that popular books on prominent central banks typically relate more frequently to the outstanding governors or presidents of the central banks than they do to the organizational structure of those banks. 4 see taylor ( 1979 ), taylor ( 1993 ), taylor ( 1999 ). a few other notable papers from the vast literature on monetary policy rules include orphanides and williams ( 2002 ), walsh ( 2009 ), and williams ( 2003 ). 5 see blinder ( 1998 ) and blinder ( 2004 ). other important contributions to the literature on monetary policy committees include blinder and morgan ( 2005 ) ; chappell, mcgregor, and vermilyea ( 2005 ) ; gerlach - kristin ( 2004 ) ; meade and stasavage ( 2008 ) ; ruge - murcia and riboni ( 2010 ) ; and warsh ( 2016 ). 6 for a discussion of the cacophony issue, see faust ( 2016 ) and powell ( 2016 ). 7 the