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BASEL II, BASEL 2




BASEL II, or BASEL 2

BASEL II (occasionally refered to as BASEL 2)is the international bank capital accord), which was first established (as Basel I) in 1988. It is essentially a published set of minimal capital requirements for banks, and is also known as the Basel Accord. It was committed to law in the G10 countries in 1992.


THE THREE PILLARS

BASEL II uses three conceptual pillars:
Pillar 1) Provides improved risk sensitivity in the way that capital requirements are calculated in 3 of the components of risk that a banks face
Pillar 2) Covers regulatory response to the first pillar
Pillar 3) Significantly increases the disclosures that banks must make.


 

 

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BASEL III
A project is underway to further develop the accord. The objective is to refine the definition of bank capital and to further improve the sensitivity of the risk measures.