Basel Accord

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Basel Accord

Agreement concluded among country representatives in 1988 in Switzerland to develop standardized risk-based capital requirements for banks across countries.

Basel Accord

An agreement on international banking regulations dealing with how banks handle risk. The Basel Accord focuses mainly on credit risk; it divides banks' assets into five categories according to how risky they are. The five categories are assets with no risk, 10% risk, 20%, 50% and 100%. All banks conducting international transactions are required under the Basel Accord to hold assets with no more than 8% aggregated risk. The Accord was promulgated in 1988.Banks in most G-10 countries have implemented it since the early 1990s. It is now considered largely outdated and is in the process of being replaced by Basel II. It is also called Basel I.
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A review of these Basel Accords begs the obvious questions: on what legal basis does the BCBS issue standards and ensure they are enforced?
For example, Kashyap and Stein (2004) argue that Basel Accord II exacerbates business cycle fluctuations by requiring banks to hold more capital during downturns.
The conditions for security interests in personal property to reduce regulatory capital under the Basel Accords are tested against modern secured transactions laws.
Under the Basel Accords, the capital requirements exclusively refer to the asset side; that is, liability risks are not taken into account under Pillar I (see also Al-Darwish et al., 2011; Gatzert and Wesker, 2012).
From the above discussion it is pretty much clear that though overall Basel capital regulations has decreased the risk taken by banks by decreasing non-performing loans, however this reduction is not consistent across all Basel accords, especially Basel I has not the reduced the risks taken by banks.
The second phase included the issuance of rules for corporate governance, the implementation of the Basel Accords, and the provision of funding for small projects.
INTERNATIONAL REGULATORY REGIMES: BRETTON WOODS AND THE BASEL ACCORDS A.
I could not speak about regulation in banking without mentioning the Basel Accords (recommendations on banking regulations)--Basel I, Basel II and Basel III--issued by the Basel Committee on Banking Supervision (BCBS).
There have been three Basel Accords, Basel I, II, and III since the inception of the Basel Committee, all of which were intended to replace simple regulatory leverage ratios with more complex, granular, calculations of bank capital ratios.
Cemex said it continues to make progress in reducing emissions and controlling production processes by measuring the carbon footprint based on international standards and the Basel Accords. Based on the Basel Accords, the company said its carbon emissions per ton of cement have fallen by 9.36%, bringing the firm closer to its 2015 target of a 10% reduction against the 2006 level.
Federal Regulators generally adopt rules consistent with the Basel Accords. The first Basel Capital Accord was published in July 1988 and fully implemented in the United States by the end of 1992.
The third installment of the Basel Accords was developed in response to the deficiencies in financial regulation revealed by the late-2000s financial crisis.