Basel II models have little relevance for developing countries, US banker says

Banking supervisors in developing countries should focus on the risk environment in which banks operate because relying on banks to measure their own safety and soundness may give little useful information about a banking sector, a senior US central banker said in June.

US Federal Reserve Board governor Susan Bies said a key aspect of the US supervisory approach to banking is its increasing reliance on the evaluation and testing of banks’ own risk management systems. She noted that the Basel Committee on Banking Supervision, the body of senior banking supervisors from the leading economies that in effect regulates international banking, wants to use similar models to calculate protective capital charges under the Basel II capital adequacy accord due to come