This has changed and a system was created by the BIS: the 1988
Basle Accord.
So banks in the EU will have to make do with what comes out of the Basle Committee, although the Commission could go beyond the
Basle Accord in its forthcoming Directive on Capital Adequacy.
The current regulatory regime of the
Basle Accord (21) imposes the same risk-based capital charge on differently rated loans.
As Friedman (1991) observed, "Traditionally, most economists have regarded the fact that banks hold capital as at best a macroeconomic irrelevance and at worst a pedagogical inconvenience." This stands in stark contrast to the importance attached to capital adequacy in the regulation of banks, especially since the adoption of the
Basle Accord in 1988, which established risk-based capital requirements in the Group of Ten countries.
The current
Basle Accord of 1988,(7) which has been adopted by the G-10 nations(8) and most other industrialized countries,(9) is the subject of Part III, which also details the current regulations and the policy considerations that led to them.
The most recently reported capital ratios of DKB exceed the relevant risk-based capital standards established under the
Basle Accord, and the proposed transaction is not expected to have a material effect on the capital of the consolidated organization.
3 Counterparty risk is considered under the 1988
Basle Accord in which banks are required to set aside capital for off-balance-sheet and derivative instruments (see Basle, 1988).
Ethan Kapstein's treatment of the 1987
Basle Accord is representative.(1) In December 1987, policymakers belonging to the Group often (G-10) signed a far-reaching agreement on international financial regulation: the
Basle Accord on the International Convergence of Capital Measures and Capital Standards.
This agreement (frequently described as 'the
Basle Accord'), if adhered to by the signatory governments, should ease somewhat the problems described above.
On top of that, banks must scramble to meet the so-called
Basle Accord international capital-adequacy standards.
The principal objectives of the
Basle Accord and the U.S.
