Economic capital paper released today by the Basel Committee for comment

The Basel Committee on Banking Supervision has published for comment its findings and recommendations on the Range of practices and issues in economic capital modelling. This work focuses on the use of economic capital measures, governance processes, risk measurement and aggregation, and the validation of economic capital models.

Mr Klaas Knot, Chairman of the Basel Committee's Risk Management and Modelling Group and Division Director of Supervision Policy for the Netherlands Bank, said today, "The paper presents the current state of practices in economic capital modelling. It discusses the steps banks have taken to address the modelling challenges they face and reviews supervisory concerns relating to current bank practices."

Mr Knot added "I believe the paper provides an important contribution to our understanding of economic capital modelling within large banking organisations. In addition, it sets out a number of recommendations that should help strengthen both banking and supervisory practices."

Comments on the paper are invited and should be forwarded by e-mail to the Basel Committee Secretariat at baselcommittee@bis.org by 28 November 2008.

Alternatively, comments may be addressed to:

Basel Committee on Banking Supervision
Bank for International Settlements
Centralbahnplatz 2
CH-4002 Basel
Switzerland