The Basel II framework: the role and implementation of Pillar 2.

Discussions on the reform of the “Basel I” capital ratio, or “Cooke” ratio, which dates from 1988, were initiated in the late 1990s under the aegis of the Basel Committee. They culminated in June 2004 with the publication of a new Accord on international convergence of capital measurement and capital standards, commonly referred to as “Basel II”. The new Accord was updated in November 2005 to incorporate several technical additions. The Basel II framework is designed to permit a more risk-sensitive and more comprehensive coverage of banking risks. It consists of three complementary and mutually reinforcing “pillars”. Pillar 1 consists of the basic minimum capital requirements. Pillar 2 introduces the principle of a structured dialogue between banking institutions and supervisors. Pillar 3 is focused on transparency and market discipline. Each of these three pillars represents a major innovation, marking the transition from a prudential framework based on simple quantitative rules to a more complete set of standards which, in addition to using a more risk-sensitive quantitative approach, incorporates qualitative principles that institutions are expected to comply with. However, Pillar 2 has a unique characteristic that distinguishes it from the other two Pillars. It reaffirms and provides a rationale for the existing practice of many supervisors: conducting a quantitative and qualitative review of all risks using their own tools but also the processes for risk monitoring developed by banks themselves. These reviews may lead to various supervisory measures, including the imposition of additional capital requirements under Pillar 2. The extensive consultations conducted in the past few years between supervisors and the banking industry have gradually led to the implications of Basel II being taken on board by all of the parties concerned. First of all, institutions focused on adapting their information systems to the requirements laid down in Pillar 1. For a long time, Pillar 2 was the least commented on part of the Basel reform. However, the entry into force of the new ratio will take place from the beginning of 2007 –in France as in the other countries of the European Economic Area– since the transposition of the Accord into Community law has taken the form of a new Capital requirements directive (CRD). In the run-up to this deadline, Pillar 2 has become a major topic of discussion between banks and their supervisors, and it therefore seems opportune to further clarify how the Commission bancaire will implement Pillar 2. In particular, the cross-border implementation of the new framework raises many questions, to which European supervisors have responded by developing rules that are as harmonised as possible. Beyond these considerations, thought needs to be given to the fundamental purpose of Pillar 2 and to its practical implementation. The increased risk-sensitivity of capital requirements under Pillar 1 undeniably represents a major advance, but it results in increased correlation of capital requirements with the business cycle, the degree of which will be specifi c to each institution. From the perspective of micro and macro-prudential stability, the fl uctuations in the regulatory ratio that might result from this correlation must be understood and, if possible, kept in check. This article seeks to show how this objective could be achieved through a possible approach to Pillar 2 involving the putting in place of a capital cushion in addition to the regulatory minimum.

Financial stability and the New Basel Accord.

This study outlines how proposed changes to international capital adequacy standards – commonly referred to as “Basel II” – will reinforce financial stability. Basel II is designed to contribute to the prevention of individual bank failures by making minimum capital standards more flexible and aligning them more closely with actual risks and changes in the level of risk. By bringing regulatory capital closer to the concept of economic capital that banks use in their internal management, and by going to the core of banks’ financial information systems, the proposed changes will foster better control of risks. By reducing credit disruptions, the changes should help to limit the severity of macro-economic and sectoral downturns and thereby improve financial stability. Concerns have been expressed about the potential “procyclicality” of the new standards, and the possibility of sharp swings in regulatory capital requirements leading to dramatic shifts in the availability of credit. These concerns, while theoretically appealing, do not appear warranted in practice. The Basel Committee took steps early on to ensure that cyclical effects would be moderated, while still achieving the goal of making capital ratios more risk-sensitive, more closely related to the bank’s management of its “risk-return” tradeoff, and therefore more useful as an internal control tool. In contrast with Basel I, which is external to banks’ methods of management, Basel II incorporates an advanced IRB approach. It can therefore figure as a central element in banks’ strategic planning. The success of the proposed changes will depend on how they are applied by bank managers and on the vigilance of bank supervisors in overseeing their implementation. Numerous contacts and on-site examinations carried out to date are encouraging in this regard. A hoped-for reform in the rules on provisioning, consistent with the new capital standard – factoring in ex ante the impact of expected but unrealized credit losses over the credit cycle instead of concentrating them at the lowest point of the cycle – would contribute significantly to financial stability.

A far UV study of interstellar gas towards HD34078: high excitation H2 and small scale structure - Based on observations performed by the FUSE mission and at the CFHT telescope

To investigate the presence of small scale structure in the spatial distribution of H2 molecules we have undertaken repeated FUSE UV observations of the runaway O9.5V star, HD34078. In this paper we present five spectra obtained between January 2000 and October 2002. These observations reveal an unexpectedly large amount of highly excited H2. Column densities for H2 levels from (v = 0, J = 0) up to (v = 0, J = 11) and for several v = 1 and v = 2 levels are determined. These results are interpreted in the frame of a model involving essentially two components: i) a foreground cloud (unaffected by HD34078) responsible for the H2 (J = 0, 1), CI, CH, CH+ and CO absorptions; ii) a dense layer of gas (n = 10E4 cm-3) close to the O star and strongly illuminated by its UV flux which accounts for the presence of highly excited H2. Our model successfully reproduces the H2 excitation, the CI fine-structure level populations as well as the CH, CH+ and CO column densities. We also examine the time variability of H2 absorption lines tracing each of these two components. From the stability of the J = 0, 1 and 2 damped H2 profiles we infer a 3 sigma upper limit on column density variations Delta(N(H2))/N(H2) of 5% over scales ranging from 5 to 50 AU. This result clearly rules out any pronounced ubiquitous small scale "density" structure of the kind apparently seen in HI. The lines from highly excited gas are also quite stable (equivalent to Delta(N)/N <= 30%) indicating i) that the ambient gas through which HD34078 is moving is relatively uniform and ii) that the gas flow along the shocked layer is not subject to marked instabilitie

Tackling functional redundancy of Arabidopsis fatty acid elongase complexes

Very-long-chain fatty acids (VLCFA) are precursors for various lipids playing important physiological and structural roles in plants. Throughout plant tissues, VLCFA are present in multiple lipid classes essential for membrane homeostasis, and also stored in triacylglycerols. VLCFA and their derivatives are also highly abundant in lipid barriers, such as cuticular waxes in aerial epidermal cells and suberin monomers in roots. VLCFA are produced by the fatty acid elongase (FAE), which is an integral endoplasmic reticulum membrane multi-enzymatic complex consisting of four core enzymes. The 3-ketoacyl-CoA synthase (KCS) catalyzes the first reaction of the elongation and determines the chain-length substrate specificity of each elongation cycle, whereas the other three enzymes have broad substrate specificities and are shared by all FAE complexes. Consistent with the co-existence of multiple FAE complexes, performing sequential and/or parallel reactions to produce the broad chain-length-range of VLCFA found in plants, twenty-one KCS genes have been identified in the genome of Arabidopsis thaliana. Using CRISPR-Cas9 technology, we established an expression platform to reconstitute the different Arabidopsis FAE complexes in yeast. The VLCFA produced in these yeast strains were analyzed in detail to characterize the substrate specificity of all KCS candidates. Additionally, Arabidopsis candidate proteins were transiently expressed in Nicotiana benthamiana leaves to explore their activity and localization in planta. This work sheds light on the genetic and biochemical redundancy of fatty acid elongation in plants

Small scale structure in molecular gas from multi-epoch observations of HD 34078

We present spectroscopic observations of the runaway reddened star HD 34078 acquired during the last three years at Observatoire de Haute Provence and McDonald Observatory as well as other spectra obtained since 1990. The drift of the line of sight through the foreground cloud due to the large transverse velocity of HD 34078 allows us to probe the spatial distribution of CH, CH+, CN and DIBs carriers at scales ranging from about 1 AU up to 150 AU. In particular, time variations in the equivalent width of absorption lines are examined. A few past and recent high resolution observations of CH and CH+ absorption are used to search for line profile variations and to convert equivalent widths into column densities. The data set reveals a 20 % increase in CH column density over the past 10 years with no corresponding variation in the column density of CH+ or in the strengths of the 5780 and 5797 AA DIBs. CN observations indicate that its excitation temperature has significantly increased from < 3.1 K in 1993 to 3.6 +- 0.17 K in 1998 while the CN column shows only a modest rise of ~ 12 +- 6 %. The data also strongly suggest the existence of weak correlated variations in CH and CH+ columns over periods of 6 - 12 months (or ~ 10 AU). These results are discussed in relation to CH+ production mechanisms. A dense newly intervening clump is considered in order to explain the long-term increase in the column density of CH, but such a scenario does not account for all observational constraints. Instead, the observations are best described by CH+ production in a photodissociation region, like that suggested for the Pleiades and IC 348.Comment: 12 pages, 14 figures. accepted for publication in A&A. v2 : the few notes on the absorption line at 5772 AA have been remove

Epidemiological, virological and clinical characteristics of HBV infection in 223 HIV co-infected patients: a French multi-centre collaborative study

BACKGROUND: Chronic hepatitis B (CHB) is a clinical concern in human immunodeficiency virus (HIV)-infected individuals due to substantial prevalence, difficulties to treat, and severe liver disease outcome. A large nationwide cross-sectional multicentre analysis of HIV-HBV co-infected patients was designed to describe and identify parameters associated with virological and clinical outcome of CHB in HIV-infected individuals with detectable HBV viremia. METHODS: A multicenter collaborative cross-sectional study was launched in 19 French University hospitals distributed through the country. From January to December 2007, HBV load, genotype, clinical and epidemiological characteristics of 223 HBV-HIV co-infected patients with an HBV replication over 1000 IU/mL were investigated. RESULTS: Patients were mostly male (82%, mean age 42 years). Genotype distribution (A 52%; E 23.3%; D 16.1%) was linked to risk factors, geographic origin, and co-infection with other hepatitis viruses. This genotypic pattern highlights divergent contamination event timelines by HIV and HBV viruses. Most patients (74.7%) under antiretroviral treatment were receiving a drug with anti-HBV activity, including 47% receiving TDF. Genotypic lamivudine-resistance detected in 26% of the patients was linked to duration of lamivudine exposure, age, CD4 count and HIV load. Resistance to adefovir (rtA181T/V) was detected in 2.7% of patients. Advanced liver lesions were observed in 54% of cases and were associated with an older age and lower CD4 counts but not with viral load or genotype. Immune escape HBsAg variants were seldom detected. CONCLUSIONS: Despite the detection of advanced liver lesions in most patients, few were not receiving anti-HBV drugs and for those treated with the most potent anti-HBV drugs, persistent replication suggested non-optimal adherence. Heterogeneity in HBV strains reflects epidemiological differences that may impact liver disease progression. These findings are strong arguments to further optimize clinical management and to promote vaccination in HIV-infected patients

Microbial Dysbiosis in Colorectal Cancer (CRC) Patients

The composition of the human intestinal microbiota is linked to health status. The aim was to analyze the microbiota of normal and colon cancer patients in order to establish cancer-related dysbiosis

Extinction with 2MASS: star counts and reddening toward the North America and the Pelican Nebulae

We propose a general method for mapping the extinction in dense molecular clouds using 2MASS near-infrared data. The technique is based on the simultaneous utilization of star counts and colors. These two techniques provide independent estimations of the extinction and each method reacts differently to foreground star contamination and to star clustering. We take advantage of both methods to build a large scale extinction map (2.5 x 2.5 degrees) of the North America-Pelican nebulae complex. With Ks star counts and H-Ks color analysis the visual extinction is mapped up to 35 mag. Regions with visual extinction greater than 20 mag account for less than 3% of the total mass of the cloud. Color is generally a better estimator for the extinction than star counts. Nine star clusters are identified in the area, seven of which were previously unknown.Comment: 33 pages, 14 figures, accepted in A

Mutation Rate Switch inside Eurasian Mitochondrial Haplogroups: Impact of Selection and Consequences for Dating Settlement in Europe

R-lineage mitochondrial DNA represents over 90% of the European population and is significantly present all around the planet (North Africa, Asia, Oceania, and America). This lineage played a major role in migration “out of Africa” and colonization in Europe. In order to determine an accurate dating of the R lineage and its sublineages, we analyzed 1173 individuals and complete mtDNA sequences from Mitomap. This analysis revealed a new coalescence age for R at 54.500 years, as well as several limitations of standard dating methods, likely to lead to false interpretations. These findings highlight the association of a striking under-accumulation of synonymous mutations, an over-accumulation of non-synonymous mutations, and the phenotypic effect on haplogroup J. Consequently, haplogroup J is apparently not a Neolithic group but an older haplogroup (Paleolithic) that was subjected to an underestimated selective force. These findings also indicated an under-accumulation of synonymous and non-synonymous mutations localized on coding and non-coding (HVS1) sequences for haplogroup R0, which contains the major haplogroups H and V. These new dates are likely to impact the present colonization model for Europe and confirm the late glacial resettlement scenario