Update on work on the New Basel Capital Accord

September 2001

The purpose of this update is to inform the banking industry, the supervisory community and other interested parties about the work under way on the New Basel Capital Accord by the Basel Committee on Banking Supervision's Capital Group. The Capital Group is responsible for work on various components of the New Basel Capital Accord, including the development of the standardised approach and the treatment of credit risk mitigation (CRM) techniques. It has also been evaluating the large amount of constructive and helpful comments received on the second Consultative Package released in January 2001.

As part of its continuing dialogue with the banking industry and other relevant parties, the Capital Group believes it would be beneficial at this stage to provide information on the direction of its work on the treatment of CRM techniques such as collateral, guarantees and credit derivatives. This newsletter also provides information on a slight change to the current Accord as it pertains to the treatment of non-domestic OECD public sector entities in certain circumstances.

There are several other streams of work on the New Basel Accord that are being conducted by other Working Groups and Task Forces of the Basel Committee. The Basel Committee is planning to release working papers on a variety of topics, including operational risk, disclosure, asset securitisation and specialised lending (e.g. project finance) in the coming weeks.