BIS Chief Calls For Beefing Up The Basel Pact
BRUSSELS -- The closure of Bank of Credit and Commerce International shows that the international guidelines known as the Basel agreement should be strengthened, said the director general of the Bank for International Settlements.
The remark by Alexandre Lamfalussy, chief executive of the Basel, Switzerland-based central bank for central banks, was reported in the Belgian newspaper Le Soir.
The 1974 Basel agreement among central bank members of the BIS established rules on the supervision of banks' international operations.
Mr. Lamfalussy said there was "pressing need" to enlarge the geographical spread of international banking supervision, until now confined mainly to the Group of 10 industrialized nations. In September the group is to discuss possible changes to the pact, the newspaper said.
But Mr. Lamfalussy said he doubted that supervisors should be given power to reject the structure of a banking group. "If one says a certain structure is unacceptable, one intervenes in the internal decisions of companies."
The central banks' direct response to the BCCI scandal should probably be cautious, he said, and no specific rules should be imposed. "We have to allow supervisors to examine a structure on a case-by-case basis."
Mr. Lamfalussy also said supervisors should not "overreact" in the BCCI case, which he hopes is exceptional. "I do not think there are four or five BCCIs hiding in other big international banks," he said.