US central banker urges pillar 3 action now in light of scandals

Recent accounting scandals mean international banks should start improving their disclosure of risks and capital adequacy now and not wait for the pillar 3 disclosure provisions of the Basel II bank accord to take effect in late 2006, a senior US central banker urged in early June.

The breakdowns in accounting, auditing and corporate governance exemplified by the collapse of the energy-trading group Enron and other scandals, should serve as ‘a wake up call’ to corporate boards, management and auditors to enforce ethical standards and effective controls, US Federal Reserve Board governor Susan Bies said.

Banks must strengthen corporate governance to prevent such abuses occurring in their institutions, Bies told the Institute of International Bankers in New York. She made