Rufus Folorunso Akinyooye - St Clements University

Item 2 - States the intention that national authorities of member countries would prepare
papers setting out their views on the timetable and the manner in which the Accord would be
implemented in their respective countries with a view to implementing it as soon as possible.
It further stated that the document was being circulated to supervisory authorities in countries
outside the G10 for banks conducting “significant” international business. An international
business would be significant if it involved cross-border lending between G10 banks and
others ostensibly within OECD a default of which could endanger the capital of the G10 banks.
Item 3 - States the two fundamental objectives of the Basel Committee’s work on regulatory
convergence which are (1) that the new framework would serve to strengthen the soundness
and stability of the international banking system and (2) that the new framework would be fair
and with a high degree of consistency in its application to banks in different countries and
produce a level playing ground for competition among international banks.
Item 4 - Reveals that while the Committee was deliberating on this Account the authorities of
the European Community in Brussels were pursuing a parallel initiative to develop a common
solvency ratio to be applied to Credit institutions within the Community. The Committee said
it had maintained contact with the body so as to ensure consistency between the Basel
framework and that of Brussels more so that the latter would only apply to credit institutions
generally while the former was being directed more specifically to banks doing international
business.
Item 5 - States that the Committee, while developing this framework recognized the
divergence of supervisory and accounting systems in individual member countries and had
sought to harmonize them. It had provided for a transitional period within which the existing
circumstances can be reflected in flexible arrangement that allow time for adjustment.
Item 6 - Permits national discretion in the application of risk weightings in certain very limited
respect with the hope that they will not be significant enough to compromise the basic
objectives.
Item 7 - Stresses that the agreed framework provided for only minimum levels of capital for
internationally active banks. Higher levels could be adopted at national discretion.
Item 8 declares that the framework was directed towards assessing capital in relation to credit
risk and advised supervisors to take other risks like interest rate risk and investment risk into
account in assessing overall capital adequacy. The Committee would continue to monitor
provisioning policies by banks in member countries with a view to promoting convergence of
policies there as in other regulatory matters.
Item 9 - Discloses the Committee’s awareness of the divergence among member countries in
the fiscal treatment and accounting presentation for tax purposes of certain classes of provision