Our concerns on the potential impact of the proposed new Basel Capital Accord (Basel II) were first expressed following the release of the second Consultative Paper (CP2) in January 2001.2 However, since that time a number of modifications have been made to the proposals that go some way to addressing these original concerns. The most recent paper of ours on this subject was published in the Financial Regulator in September 2002. This paper reiterated our concerns about the potential impact of the proposals on developing and emerging economies, assessed the likely impact of the modifications announced by that time, and highlighted remaining areas of concern.
