The new Basel capital accord (Basel II) for banks has finally been approved. Banks have a lot of work to do in getting ready for its implementation at the end of 2006.

Without much fanfare, the world`s central bankers in June put the final seal of approval on a new framework designed to improve the way banks manage their risk. Called the second Basel capital accord, or Basel II, after the town in Switzerland where the world`s banking super-regulator sits, it is the result of more than five years` work and is due to be implemented at the end of 2006.

The final version of Basel II is of course just the culmination of several working drafts, so its provisions should come as no surprise to the world`s bankers. Still, there are concerns about how easily banks will manage to comply with the provisions.