A critical review of the new capital adequacy framework paper issued by the Basle Committee on Banking Supervision and its implications for the rating agency industry

This paper will concentrate on two main areas. First, on the way in which the Committee intends to allocate capital by assessing risk on the basis of both external and internal ratings and, second, on how it intends to use recognised independent rating agencies. It also includes a comment on bank disclosure. The paper is written from the perspective of Fitch IBCA (FI), the world's third largest international rating agency. As a result, other institutions, possibly with a different perspective, may not agree with its contents. (C) 2001 Elsevier Science B.V. All rights reserved. JEL classification. G11; G20; G21: G31.