1. The Basle Committee on Banking Supervision 1 is issuing an amendment to the Capital Accord of July 1988 that broadens the recognition of bilateral netting for capital adequacy purposes, and for industry comment a proposal for recognising netting effects in the calculation of add-ons for potential future credit exposure and a proposal to expand the matrix of add-on factors for potential future credit exposure in the 1988 Capital Accord.
2. The amendment to the Capital Accord, attached as Annex 1, will be implemented by members of the Committee in accordance with their own rules and procedures.
3. The two proposals are clearly linked and should be assessed together in order for individual banks to determine the overall impact on their adherence to capital adequacy standards. Comments on the proposals, which are being issued by members of the Committee in their respective countries, are invited by 10th October 1994. The consultative process will be handled at national level in the first instance and the Committee will coordinate the comments and responses made to its members individually. The Committee aims to implement the proposals by mid-1995.
1 The Basle Committee on Banking Supervision is a committee of banking supervisory authorities which was established by the central-bank Governors of the Group of Ten countries in 1975. It consists of senior representatives of bank supervisory authorities and central banks from Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, Netherlands, Sweden, Switzerland, United Kingdom and the United States. It usually meets at the Bank for International Settlements in Basle.
