Basel Accord Essay example
Undergraduate
Essay
Finance & Accounting
Pages 4 (1004 words)
Download 1
When banks are operating at optimum efficiencies they are essential to the growth of the modern economy, facilitating spending and investments, allowing homes to be purchased, and businesses to expand…

Introduction

This can cause a domino effect involving millions of citizens. Because banking has become more and more an international endeavor, there is a greater need for banking regulations that encourage international cooperation. The organization responsible for monitoring international banking is the Basel Committee on Bank Supervision, or BCBS. One of their major focuses is in regulating a bank’s capital. These concerns were considered and resulted in the establishment of the standards of banks to meet capital adequacy; these standards are all called the Basel Accords. (Larson, 2011) Background The BCBS was originally established in the 1970s to tackle the new challenges of banking across international boundaries. It became apparent that the failings and collapse of one country's banks was now being felt in other countries all over the world. It was obvious that intervention and prevention was necessary. In the 1980s, the United States Congress, pushed domestic regulatory agencies to set and enforce standards, including a fixed proportion of capital a bank must hold, or capital adequacy.(Lall, 2009) This is how the Basel Accords began. The accords have been adapted and expanded in attempts to meet needs and to speak to aspects that previous version of the accords may not have addressed sufficiently. In order to understand the Basel Accords better it is useful to review them individually in order to better compare and contrast the variations. ...
Download paper
Not exactly what you need?

Related papers

Basel III and the Continuing Evolution Of Bank Capital Regulation
The Basel Framework has ever since acted as a compulsory discipline for the banks and has contributed to the monetary power of the banking federation as a whole (Bank for International Settlements, 2011; Blundell-Wignall & Atkinson, 2010). The capital adequacy limits set by the Basel Committee on Banking Supervision on the banks are anticipated to decrease the insolvency perils of the banks. The…
The Likely Impact of the Basel II Accord on Shipping Finance
The aim of the accord is to impose a formula that is used by banks to access risk before lending to any organisation. Shipping industry has a unique risk that affects the financial performance. The paper looked at risk assessment applied by financial institutions as imposed by Basel II accord and the behaviour of shipping industry (Bookstaber R., 2007, p.71). The analysis that was carried out…
A critical study of credit risk management in the first bank of Nigeria Plc.
Circumstances led to the situation in which the giant loss incurring banks due to subprime crisis have to solely depend on capital flow from Middle East, Chinese and investors from Singapore. Thus major nucleus of these losses has been related to credit risk. Thus the notion of the credit risk management is a grave concern in this world of complex financial milieu and it has become highly…
International aspects of business law
Increasingly international trade organizations such as the WTO and bilateral free-trade agreements such as those in place with the United States and E.U. can significantly shape and alter the economic environment in a way that financial planners must identify and manage for investment clients with advance preparation. The importance of international law to traders in this context of financial…
A critical study of credit risk management in the First Bank of Nigeria PLC
All types of transactions have risk factors attached to them. If considered as an isolated case, then the loss can be treated as standalone. However, if a portfolio is considered like financial instruments and loans, there is the diversification effect which means risks of individual transactions get diluted. This is because every individual transaction cannot become a bad debt, and it is also not…
money and capital market
With reference to this, the paper will discuss about the challenges and issues associated with Basel II, which further led to the proposal of replacing it with Basel III. Discussion Basel Accords Basel Accords refer to a set of banking regulations issued by Basel Committee on Banking Supervision (BCBS). The association has developed three Basel accords till date, which comprise of Basel I, II and…
Banking Regulation and Risks
The banks are now on a constant quest to out-wind the effects of the global financial crisis and encounter a new business era. The change in the regulatory framework of banks has been observed globally. The practices of the banks of increased regulatory requirement have are hindered the banks from progressing (Ernst & Young, 2011). Hence, this report aims to highlight the effect of the global…