Demo: Basel Accords

Basel Accords

The Basel Accords refer to a series of banking supervision regulations issued by the Basel Committee on Banking Supervision (BCBS). These accords establish international standards for banking regulations, particularly focusing on capital requirements, risk management, and financial stability.

Evolution of Basel Accords

  1. Basel I (1988)
    • Developed through deliberations among central banks of major economies.
    • Established minimum capital requirements for banks.
    • Also known as the 1988 Basel Accord, it was enforced in G-10 countries by 1992.
  2. Basel II (2004)
    • Designed to replace Basel I with a more risk-sensitive framework.
    • Focused on risk management, capital adequacy, and supervisory review.
  3. Basel III (Post-2008)
    • Introduced in response to the 2007–2008 financial crisis.
    • Does not replace Basel I or II but enhances their frameworks.
    • Aims to strengthen capital requirements, liquidity management, and risk mitigation to prevent bank failures.

Basel Framework

The Basel Accords are now part of the Basel Framework, which consolidates all existing and upcoming regulations issued by the BCBS. This framework continues to evolve, ensuring that global banking standards remain robust and adaptive to financial risks.