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    Basel I, Ii, Iii

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    Gaurav Prabhaker
    Basel I, II, and III are international banking regulatory standards issued by the Basel Committee on Banking Supervision. Basel I established minimum capital requirements for banks in 1988 in response to bank failures. Basel II aimed to create a consistent international standard for banking regulations by setting risk and capital management rules. Basel III further strengthened bank capital and liquidity standards after issues were revealed by the 2008 financial crisis. It requires different reserve levels for various bank deposits and liabilities.

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    Basel I, Ii, Iii

    Uploaded by

    Gaurav Prabhaker
    53 views2 pages
    Basel I, II, and III are international banking regulatory standards issued by the Basel Committee on Banking Supervision. Basel I established minimum capital requirements for banks in 1988 in response to bank failures. Basel II aimed to create a consistent international standard for banking regulations by setting risk and capital management rules. Basel III further strengthened bank capital and liquidity standards after issues were revealed by the 2008 financial crisis. It requires different reserve levels for various bank deposits and liabilities.

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    Read about Basel I,II and III

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    BASEL I

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    Basel I, II, and III are international banking regulatory standards issued by the Basel Committee on Banking Supervision. Basel I established minimum capital requirements for banks in 1988 in response to bank failures. Basel II aimed to create a consistent international standard for banking regulations by setting risk and capital management rules. Basel III further strengthened bank capital and liquidity standards after issues were revealed by the 2008 financial crisis. It requires different reserve levels for various bank deposits and liabilities.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    53 views2 pages

    Basel I, Ii, Iii

    Uploaded by

    Gaurav Prabhaker
    Basel I, II, and III are international banking regulatory standards issued by the Basel Committee on Banking Supervision. Basel I established minimum capital requirements for banks in 1988 in response to bank failures. Basel II aimed to create a consistent international standard for banking regulations by setting risk and capital management rules. Basel III further strengthened bank capital and liquidity standards after issues were revealed by the 2008 financial crisis. It requires different reserve levels for various bank deposits and liabilities.

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    BASEL I, II, III

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    Basel I is the round of deliberations by central bankers from around the world, and in 1988, the Basel
    Committee on Banking Supervision (BCBS) in Basel, Switzerland, published a set of minimum
    capital requirements for banks. This is also known as the 1988 Basel Accord, and was enforced by
    law in the Group of Ten (G-10) countries in 1992.
    Basel I was formed in response to the messy liquidation of Cologne-based Herstatt Bank in 1973. On
    26 June 1974 a number of banks had released Deutschmarks (the German currency) to the Herstatt
    Bank in exchange for dollar payments deliverable in New York. Due to differences in the time zones,
    there was a lag in the dollar payment to the counterparty banks; during this lag period, before the
    dollar payments could be effected in New York, the Herstatt Bank was liquidated by German
    regulators.
    Basel I, that is, the 1988, Basel Accord, is primarily focused on credit risk and appropriate risk-
    weighting of assets. Banks with an international presence are required to hold capital equal to 8% of
    their risk-weighted assets (RWA).
    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.
    Basel II, initially published in June 2004, was intended to create an international standard for
    banking regulators to control how much capital banks need to put aside to guard against the types of
    financial and operational risks banks face. One focus was to maintain sufficient consistency of
    regulations so that this does not become a source of competitive inequality amongst internationally
    active banks.
    Basel II attempted to accomplish this by setting up risk and capital management requirements
    designed to ensure that a bank has adequate capital for the risk the bank exposes itself to through its
    lending and investment practices.
    Basel II uses a three pillars concept minimum capital requirements (addressing risk),
    supervisory review and market discipline.
    Basel III is a global, voluntary regulatory standard on bank capital adequacy, stress testing and
    market liquidity risk. The third installment of the Basel Accords was developed in response to the
    deficiencies in financial regulation revealed by the late-2000s financial crisis. Basel III was supposed
    to strengthen bank capital requirements by increasing bank liquidity and decreasing bank leverage.
    Basel III is primarily related to the risks for the banks of a run on the bank by requiring differing
    levels of reserves for different forms of bank deposits and other borrowings.
    From 1988 this framework was progressively introduced in member countries of G-10, comprising 13
    countries as of 2013: Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, Netherlands,
    Spain, Sweden, Switzerland, United Kingdom and the United States of America.

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