Basel Accord Consultative Paper Published
May 1, 2003
Circular No. 11510

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

In a press release, the Federal Reserve Board announced the release of the third consultative paper on the new Basel Capital Accord for comment on April 29, 2003. The paper issued by the Basel Committee on Banking Supervision, based in Basel, Switzerland, seeks to continue the consultation process on revising the 1988 Capital Accord.

The Basel Committee released the previous consultative paper on the new Accord in January 2001. The proposals have been substantially revised since that time to reflect the comments received on the 2001 document, as well as comments on several other documents released by the Basel Committee. Particular focus has been given to the Internal Ratings Based Approaches for commercial and retail credits, securitization, and the quantitative methodologies for operational risk.

The U.S. agencies plan to follow the release of this consultative paper with an Advance Notice of Proposed Rulemaking (ANPR) in the next few months. This ANPR will be based on the Committee's third consultative paper and will focus on how the U.S. agencies intend to implement domestic changes that reflect the specific nature of U.S. banks and banking.

The paper is available on the committee's website at, and the website of the Office of the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corporation. Comments on the consultative paper may be sent to both the Basel Committee and the regulatory agencies. Details on where to send the comments are given in the press release.

Comments are invited by July 31, 2003.

Questions on this matter may be directed at this Bank to Darryll E. Hendricks, Senior Vice President, Banking Applications Policy and Analysis.