The present invention proposes a new method and apparatus for the improvement of digital filterbanks, by a complex extension of cosine modulated digital filterbanks. The invention employs complex-exponential modulation of a low-pass prototype filter and a new method for optimizing the characteristics of this filter. The invention substantially reduces artifacts due to aliasing emerging from independent modifications of subband signals, for example when using a filterbank as an spectral equalizer. The invention is preferably implemented in software, running on a standard PC or a digital signal processor (DSP), but can also be hardcoded on a custom chip. The invention offers essential improvements for various types of digital equalizers, adaptive filters, multiband companders and spectral envelope adjusting filterbanks used in high frequency reconstruction (HFR) systems. (FIG. 1)