Basel II seen as meeting key challenge

The Basel II banking accord is the latest and highly welcome example of how regulators and policy-makers are meeting one of the two key challenges facing them today, Bank for International Settlements (BIS) president Urban Bäckström said in June.

The proposed Basel II rules on how much capital large international banks will have to set aside from 2005 to guard against banking risks will help meet the challenge of strengthening lines of defence in the prudential area, he told the BIS annual meeting.

He said the second challenge is to assess critically the relationship between monetary policy and financial stability with a view to consolidating gains made on the inflation front without unwittingly incurring costs.

The BIS, known as the

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