Basel Capital Accord II

Paper Summary:

This paper describes and explains the internationally agreed upon framework for capital measurement that was developed by the Basel Committee on Banking Supervision as part of the New Basel Capital Accord. It explains the revisions in the New Accord, which focus on advanced risk and capital measurement methodologies, the main drive for imposing the new regulation requirements, the Accord's risk management philosophy, and how it is supposed to handle risks within financial institutions.

From the Paper:

"The Basel Capital Accord was published in July 1988, with full implementation completed by the signatories of the Accord by the end of 1992. The New Accord was proposed in early 2002, with finalized edicts during 2003 and full implementation scheduled for January 1, 2007. The New Basel Accord will have a major impact on the global financial industry and will facilitate global coordination.1 Approximately 110 countries are signatories to the New Basel Accord. The European Union (EU), Canada, United Kingdom, Singapore, Australia, and the United States are accelerating the implementation of the New Basel Accord in their jurisdictions."

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