program with clear time - frames for the implementation. it is obvious that the imf and the world bank should have a leading role with regard to monitoring the implementation of the core principles. the main argument for this structure is that the international financial institutions already send missions to almost all countries in the world. however, it is generally acknowledged that the basle committee possesses great expertise in bank regulation. i therefore plead for a model in which the basle committee, the imf and the world bank each and together assist countries in realising financial stability in their respective fields of competence. in this model, the imf and the world bank are primarily responsible for creating a sound environment for banking, which is highly dependent on viable government policies. as part of the assessment of government policies, these institutions will of course also pay attention to the quality of bank supervision. 20. the basle committee is primarily responsible for the amendment and interpretation of the principles and will review compliance with the principles at the international conference of banking supervisors in october 1998 and bi - annually thereafter. the basle committee can furthermore make a major contribution towards the implementation of the principles by offering technical assistance and courses to supervisors in emerging countries. in this respect, banking and traffic again look alike. it is all a matter of knowing your responsibility ; if you do not make a timely agreement about who drives home, you both end up drinking too much.

but before that a short word on the way the principles have been developed because it shows an important development in the cooperation between the members of the basle committee and other countries. the principles were first drafted by a joint working group consisting of a number of basle committee members and representatives from 15 other countries. subsequently a very lively exchange of views took place in a meeting in basle in march of this year in which representatives of approximately 40 countries, including the chairmen of all regional groups, participated. to my satisfaction the consultation period following that meeting produced a large number of reactions, nearly all of them favourable. these reactions will be incorporated in the core principles. to endorse the final text of the principles, a similar meeting to the one in march will take place on september 10th in basle. two weeks later, in conjunction with the annual meeting in hong kong, the imf and the basle committee will co - sponsor a conference to introduce the principles to as wide as possible an audience of ministries of finance and central banks. 3. as i said, the main rational behind the core principles has been the increased awareness among policy - makers that banking crises can aggravate recessions. another reason for the formulation of core principles is the increased globalisation of economic activity. with the strong growth of trade and financial flows between national economies, banking problems in one country have much more potential to spread to other parts of the world. a specific form of globalisation concerns the increasing international activities of large banks. policy makers generally welcome cross - border banking, because of the beneficial effects on the efficiency, liquidity and depth of financial markets. however, the internationalisation of banking also increases the risk of contagion of banking problems. in order to reduce this risk, the core principles pay special attention to the supervision of cross - border banking. on this subject, the most important message from the core principles is that home country supervisors should practise consolidated supervision over their internationally - active banks. in order to enable home country supervisors to fulfil this task most effectively, host country supervisors must share information with them about the local operations of foreign banks. finally, the core principles state that banking supervisors must require the local operations of foreign banks to meet the same high standards as are required of domestic institutions. advantages 4. you may wonder whether the core principles will really be able to reduce the severity and frequency of banking problems around the world. let me try to answer this question by reviewing the main