Brussels, 12/07/2004 (Agence Europe) - On Wednesday, the European Commission is expected to make proposals for adapting the Basel II agreement on banks' solvency ratio into European law. The agreement, concluded after years of negotiation between experts of the most industrialised countries, will apply as of 2007. It modifies the approach to banking solvency by replacing flat-rate ratios for own funds with ratios adopted to the risk levels really facing financial institutions. It will make it compulsory for banks to have a clearer vision of the risks facing them and their debtors, by improving the internal rating. It may also, on the other hand, make loans more expensive for young companies, a point regularly raised by SME representatives (see EUROPE of 7 July, p.13). The Commission's proposal should harmonise application in Member States of the Basel II agreement, which leaves a choice between several options.