Part 2: Complex consequences of flexibility in implementing Basel 2

Geneva, 23 March - As the global introduction of Basel 2 gets under way the process is being complicated by the multiplicity of approaches available to regulators in the new accord on minimum required capital.

Andrew Cornford, Research Fellow at the Financial Markets Center, USA. This article was first published in The South-North Development Monitor (#6193,19 February 2007).

Furthermore, there is a danger that the concerns of countries with small, less developed banking sectors may be marginalised. Ironically, these problems are linked to the attempt of the Basel Committee on Banking Supervision (BCBS), to accommodate within the rules of Basel 2, banks of very different levels of sophistication and many of the points raised by critics during the drafting process.