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innovation designed to circumvent regulatory requirements and shifts banks' focus away from their core economic functions. Tighter capital requirements based on risk-weighted assets, introduced in the Basel III, may further contribute to these skewed incentives. New liquidity regulation, notwithstanding its good intentions, is another likely candidate to increase bank incentives to exploit regulation.
703:. In early publications, the Committee sometimes used the British spelling "Basle" or the French spelling "Bâle," names that are sometimes still used in the media. More recently, the Committee has deferred to the predominantly German-speaking population of the region and used the spelling "Basel", which is also a common spelling in
624:
The new standards that come into effect in
January 2023, that is, the FRTB and Basel 3.1, are sometimes referred to as Basel IV. However, the secretary general of the Basel Committee said, in a 2016 speech, that he did not believe the changes are substantial enough to warrant that title and the Basel
559:
Bank regulators in the United States took the position of requiring a bank to follow the set of rules (Basel I or Basel II) giving the more conservative approach for the bank. Because of this it was anticipated that only the few very largest US banks would operate under the Basel II rules, the others
637:
study suggest that bank regulation based on the Basel accords encourage unconventional business practices and contributed to or even reinforced adverse systemic shocks that materialised during the financial crisis. According to the study, capital regulation based on risk-weighted assets encourages
448:-wide) laws and regulations, rather than as a result of the committee's recommendations - thus some time may pass and, potentially, some unilateral changes may be made, between the international recommendations for minimum standards being agreed and implementation as law at the national level.
443:
The
Committee does not have the authority to enforce recommendations, although most member countries as well as some other countries tend to implement the Committee's policies. This means that recommendations are enforced through national (or
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reforms were published in 2010/11. The standards set new definitions of capital, higher capital ratio requirements, and a leverage ratio requirement as a "back stop" measure. Risk-based capital requirements (RWAs) for
560:
being regulated under the Basel I framework. However Basel II standards were criticised by some for allowing banks to take on too much risk with too little capital. This was considered part of the cause of the US
375:
from major countries. In 1988, the Basel
Committee 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
633:
The framework's approach to risk which is based on risk weights derived from the past was criticised for failing to account for the uncertainty in the future. A recent
598:
risk and interest rate risk in the banking book were introduced for the first time, along with a large exposures framework, a revised securitisation framework, and a
391:. It does not supersede either Basel I or II but focuses on reforms to the Basel II framework to address specific issues, including related to the risk of a
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published by the Basel
Committee in 2017, commonly known as Basel 3.1, cover further reforms of the existing framework.
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In the following years, the Basel
Committee published regulatory standards for the Liquidity Coverage Ratio (LCR) and
1041:
988:
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388:
849:"Basel III: A global regulatory framework for more resilient banks and banking systems - revised version June 2011"
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Minimum capital requirements, which sought to develop and expand the standardised rules set out in the 1988 Accord;
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Formerly, the Basel
Committee consisted of representatives from central banks and regulatory authorities of the
675:
402:, which comprises all of the current and forthcoming standards of the Basel Committee on Banking Supervision.
1204:
603:
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Effective use of disclosure as a lever to strengthen market discipline and encourage sound banking practices.
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and the committee normally meets there. The Basel
Accords is a set of recommendations for regulations in the
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and credit is 8% under Basel II. The standards were revised several times during subsequent years.
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International
Financial Co-Operation: Political Economics of Compliance with the 1988 Basel Accord
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417:
361:
refer to the banking supervision accords (recommendations on banking regulations) issued by the
602:(SA-CCR) to measure exposure to derivative transactions. A specific framework for exposures to
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was a new capital framework to supersede the Basel I framework. It introduced "three pillars":
147:
311:
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884:"Basel III: International framework for liquidity risk measurement, standards and monitoring"
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Supervisory review of an institution's capital adequacy and internal assessment process;
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Historical
Capital Regulation of Banks. Standards and Influence of Basel Accords
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Banking supervision accords issued by the Basel
Committee on Banking Supervision
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revisions introduced stressed VaR and IRC for modelled market risk in 2009-10.
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1007:. OECD Economics Department Working Papers. OECD Publishing. December 2011.
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The regulatory standards published by the committee are commonly known as
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In an October 24, 2020 speech at the Bund Financial Summit in Shanghai,
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920:"Explanatory note on the minimum capital requirements for market risk"
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was developed and published in 2004 to supersede the Basel I accords.
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The Basel Accords: The Implementation of II and the Modification of I
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are represented, as well as some other major banking locales such as
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Liew, Venus Khim-Sen; Rahim, Rossazana Ab; Riaz, Samina (2019).
613:(NSFR); and updated the standards for market risk, following a “
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1030:
High Wire: How China Regulates Big Tech and Governs Its Economy
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Systemically Important Banks and Capital Regulation Challenges
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Eubanks, Walter W.; Division, Government and Finance (2006).
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The Basel Accords have been integrated into the consolidated
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The Basel Accord was augmented in 1996 with a framework for
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They are called the Basel Accords as the BCBS maintains its
634:
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472:
122:
1108:. Congressional Research Service, the Library of Congress.
790:"Basel III: international regulatory framework for banks"
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described the Basel Accords as a "club for the elderly."
1137:
Basel Accords, Bank Capital and Portfolio Risk Behavior
918:
Basel Committee on Banking Supervision (January 2019).
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379:(G-10) countries in 1992. A new set of rules known as
938:"The global policy reform agenda: completing the job"
652:
478:
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1184:"Basel Accord - an overview ScienceDirect Topics"
600:standardised approach to counterparty credit risk
552:were introduced for the first time. The ratio of
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387:was a set of enhancements to in response to the
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699:The Basel Committee is named after the city of
1060:Deventer, Donald R. Van; Mesler, Mark (2003).
1059:
1133:
625:Committee refer to only three Basel Accords.
575:Basel III: responding to the financial crisis
338:
36:International regulatory standards for banks
1087:. Lap Lambert Academic Publishing GmbH KG.
983:. W. W. Norton & Company. p. 311.
406:The Basel Committee on Banking Supervision
371:was developed through deliberations among
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331:
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619:Basel III: Finalising post-crisis reforms
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1063:Credit Risk Models and the Basel Accords
501:. The Accord was enforced by law in the
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14:
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1021:
615:Fundamental Review of the Trading Book
412:Basel Committee on Banking Supervision
363:Basel Committee on Banking Supervision
45:Basel Committee on Banking Supervision
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493:from major countries resulted in the
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720:article for a full list of members.
520:Basel II: the new capital framework
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461:Bank for International Settlements
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1140:. Cambridge Scholars Publishing.
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479:Basel I: the Basel Capital Accord
752:"History of the Basel Committee"
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428:. Since 2009, all of the other
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676:Capital Requirements Directive
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1:
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604:central counterparty clearing
587:financial crisis of 2007–2008
389:financial crisis of 2007–2008
321:Business and Economics Portal
1028:Zhang, Angela Huyue (2024).
936:Coen, William (2016-04-05).
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278:Pillar 2: Supervisory review
135:Pillar 1: Regulatory capital
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304:Pillar 3: Market disclosure
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1084:Basel Accords Consequences
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505:(G-10) countries in 1992.
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681:Financial Stability Board
564:, which started in 2008.
548:Capital requirements for
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611:Net Stable Funding Ratio
562:subprime mortgage crisis
1155:Quillin, Bryce (2008).
1081:Elbannan, Mona (2011).
1034:Oxford University Press
1014:10.1787/5kg0ps8cq8q6-en
953:Cite journal requires
899:Cite journal requires
864:Cite journal requires
805:Cite journal requires
767:Cite journal requires
1188:www.sciencedirect.com
1113:Han, Yicheng (2020).
1205:Financial regulation
495:Basel Capital Accord
430:G-20 major economies
981:Radical Uncertainty
530:Published in 2004,
143:Capital requirement
701:Basel, Switzerland
1168:978-1-135-97959-1
1147:978-1-5275-3889-4
1126:978-3-346-30865-8
1094:978-3-8443-8363-8
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825:"Basel Framework"
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728:References
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312:Disclosure
296:Legal risk
109:Regulation
97:Background
1066:. Wiley.
718:Committee
629:Criticism
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581:Basel III
569:Basel 2.5
438:Singapore
434:Hong Kong
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979:(2020).
973:John Kay
716:See the
671:Basel IA
649:See also
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526:Basel II
393:bank run
381:Basel II
365:(BCBS).
60:Basel II
705:English
643:Jack Ma
485:Basel I
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369:Basel I
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105:Banking
85:Endgame
55:Basel I
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554:equity
246:SA-CVA
241:BA-CVA
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687:Notes
465:Basel
426:Spain
258:Basic
190:A-IRB
185:F-IRB
175:SA-CR
1163:ISBN
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1121:ISBN
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959:help
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635:OECD
567:The
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596:CVA
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