Basel 2

From Riski

Jump to: navigation, search

See also Bank for International Settlements, Basel 3, Basel Committee on Banking Supervision, capital adequacy and liquidity.

Overview

Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.

The purpose of Basel II, which was initially published in June 2004, is to create an international standard that banking regulators can use when creating regulations about how much capital banks need to put aside to guard against the types of financial and operational risks banks face.

Advocates of Basel II believe that such an international standard can help protect the international financial system from the types of problems that might arise should a major bank or a series of banks collapse.

In practice, Basel II attempts to accomplish this by setting up rigorous risk and capital management requirements designed to ensure that a bank holds capital reserves appropriate to the risk the bank exposes itself to through its lending and investment practices.

Generally speaking, these rules mean that the greater risk to which the bank is exposed, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability.

BIS releases survey on Basel II take-up

On Thursday, the Bank for International Settlements released the results of the Financial Stability Institute’s (FSI) 2010 survey on the implementation of the New Capital Adequacy Framework under Basel II. The 2010 survey follows previous surveys by FSI in 2004, 2006 and 2008.

Of the 173 jurisdictions that received the 2010 survey, 133 provided responses and of those 133, “112 countries have implemented or are currently planning to implement Basel II.” According to the FSI, these results “reinforce the conclusion of the earlier FSI surveys that Basel II will be implemented widely around the world.”

References


Personal tools