The BCBS and professional advice

The BCBS made hardly any use of outside professional advice from social scientists of any discipline during these years. The only examples of interactions between the BCBS and outside professionals that I found in the archives was when Chairman Tommaso Padoa-Schioppa, himself an economist, corresponded with Professor Robert Merton on the design of the plus factor for the Market Risk Amendment (see Chapter 7), and when Chairman Gerald Corrigan asked lawyer Ernest Patrikis, then the General Counsel of the Federal Reserve Bank of New York, to write a special report on cross-border bankruptcy issues following the BCCI collapse in July 1991 (see Chapter 11).

The BCBS dealt with international accountancy bodies, but sought no specialised accountancy advice, other than through its contacts with such bodies as IASC and IFAC. It dealt with statistical questionnaires (its preferred form of gathering empirical information), and sought to collect data, for example on maturity transformation and country risk exposures (see Chapter 5), but employed no statistician outside the ranks of the BIS. It pronounced on matters of soft law, but did not normally seek legal advice. Its regulatory proposals impinged on financial markets and on the real economy, but it hardly ever asked for advice or comment from (financial) economists, or those dealing with the economics of regulation. The only major case when outside expert help was perceived to be needed arose in the run-up to the Market Risk Amendment, when a special modelling subgroup was established to catch up with the technical work carried out by the commercial banks on (VaR-type) risk models.