Enforcement will be the real challenge, assuming that all the cumbersome legislation goes forward on financial conglomerates, pensions, new capital-adequacy rules, risk capital for small businesses, clearing and settlement, accounting standards and insolvency rules.

ECONOMIST: Laborious efforts towards a single market

And there could be a multiplier in respect of the creation of credit - because when banks lend via this form of so-called asset-backed finance, they are allowed by the capital-adequacy rules to allocate half as much of their precious capital resources as when providing overdraft loans.

BBC: How business can bypass banks

More generally, it is possible that having two sets of capital-adequacy rules will distort competition between Basel 1 and Basel 2 banks.

ECONOMIST: Bothersome Basel

Against that, though, new capital-adequacy rules due to take effect in 2006-07 will force Japanese banks to sell more of their holdings.

ECONOMIST: Suddenly, shareholders are beginning to matter

For instance, the sooner the Basle capital-adequacy rules are revised, so that they reflect more accurately the risks of short-term lending in emerging markets, the quicker banks will have the correct incentives for prudent lending.

ECONOMIST: Global finance

The rules for capital adequacy were set at global, European Union and United Kingdom level, and the FSA was required to work within them.

BBC: Abdication at the Royal Bank

Even those banks that are in good shape may want to hold back amid uncertainty over capital-adequacy requirements and accounting rules for off-balance-sheet assets.

ECONOMIST: Credit in America

Some of those rules, such as the ones on banks' capital adequacy, already look dated.

ECONOMIST: Lenses of last resort

That yields capital-adequacy ratios of about 11%, well above the 8% that international rules require.

ECONOMIST: Their condition only gets worse