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 It is now considered largely outdated and is in the process of being replaced by Basel II.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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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.
38) Appendix 1 includes a summary of the most important regulatory changes with respect to asset-backed securitisation in the proposal of the Basle Committee (2001) for a revision of the 1988 Basle Accord on Banking Supervision.
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.
A good example is the United Nations' Basle Accord aimed at preventing toxic materials from being dumped in nations with weak environmental safeguards--a noble purpose.
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.
Still, the net additional value of the Basle Accord in these dimensions is modest; as argued above, domestic government actions alone, or through bilateral understandings alone, can achieve most of the necessary accommodations to the growing internationalization of banking.
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.