The 
ECB  remains very supportive of the general thrust of the proposed capital adequacy framework for EU banks and investment firms, and shares the view that, subject to proper finalisation, the new framework will contribute to a strengthening of financial stability in the EU. 
Areas identified for change include 
 the treatment of expected and unexpected losses in the context of the Internal Ratings Based (IRB) approach to credit risk, 
 a simplification of the treatment of asset securitisation, 
 a review of the treatment of credit card commitments and 
 the treatment of certain credit risk mitigation techniques. 
The ECB  is also supportive of the additional work being undertaken in order to better understand the impact of the new framework on the structure and performance of the EU banking sector and on the financing of the EU economy. Indeed, the ECB  expects that the forthcoming “consequences report” being prepared under the auspices of the European Commission on the impact of the new capital adequacy regime on all sectors of the EU economy and in particular the SME sector will provide useful input in view of a proper finalisation of the EU regulatory framework. 
The following issues have been identified as worthy of attention:
 First, a parallel implementation of the EU regulatory framework and the New Basel Accord at the global level is of the utmost importance in ensuring competitive equality. 
 Second, the need for maintaining consistency between the New Basel Accord and the revised EU capital adequacy framework. 
 Third, flexibility and workability of the proposed regulatory framework in the light of the implementation of the Lamfalussy framework in the banking sector.
 Fourth, consistent application and convergence of supervisory practices should be given top priority.
 Fifth, the importance of tackling potential procyclical features of the new capital adequacy framework.
 Finally, the application of the New Capital Accord by the US authorities and other non-EU countries.
  
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