in october 2003, the budget and financial policies committee (bufipol) proposed that the board of directors approve a new capital adequacy policy and methodology for the calculation of loan charges for ordinary capital loans and guarantees. the committee agreed that ove should conduct an evaluation of the performance of the new capital adequacy model and policy two years after its approval, assessing how well it has fulfilled its objectives, and reporting on its financial and operational effects. this document (re-322) fulfills that requirement by evaluating the performance of both the model and the policy, as well as reporting its main financial and operational effects. the findings of the evaluation are tentative and preliminary because both the model and the policy were only very recently implemented.