Circular
Board Seeks Comment on Implementation of New Basel Capital Accord
July 15, 2003
Circular No. 11527

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

In a press release, the Federal Reserve Board issued an interagency advance notice of proposed rulemaking (ANPR) seeking public comment on the implementation of the New Basel Capital Accord in the United States. The Board is also seeking comment on draft interagency supervisory guidance on internal-ratings based system for corporate credits and draft guidance on advanced measurement approaches (AMA) for measuring operational risk.

The New Basel Capital Accord, which is being developed by the Basel Committee on Banking Supervision, builds on and, for certain banks, replaces the Basel Capital Accord of 1988, which is the framework for capital adequacy standards for large, internationally active banks and the basis for the risk-based capital adequacy standards now in place for all U.S. banks and bank holding companies.

The ANPR, developed by the Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision, presents an overview of the proposed implementation in the United States of the advanced approaches to determining capital requirements for credit risk and operational risk. The agencies anticipate that comments will be useful in shaping further refinements to the framework as the Basel Committee completes its work on the New Accord and, after that, in developing a Notice of Proposed Rulemaking to implement the New Accord in the United States.

Comments on the ANPR and two interagency guidance pieces are requested within 90 days following publication in the Federal Register, expected shortly. The Board’s memorandum is attached.

Questions on this matter may be directed at this Bank to Darryll Hendricks, Senior Vice President, Policy & Applications or to Zahra El-Mekkawy, Vice President or Dianne Dobbeck, Bank Supervision Officer, Policy and Analysis Function.