Basel I / Basel II
Earlier international accords establishing foundational bank capital requirements.
Detailed Description
Basel I / Basel II
What are Basel I and Basel II?
Basel I and Basel II are international banking regulations aimed at ensuring banks maintain adequate capital reserves to promote financial stability.
What was the main focus of Basel I?
Basel I primarily focused on credit risk and established a minimum capital requirement of 8% of risk-weighted assets.
How did Basel II improve upon Basel I?
Basel II introduced a three-pillar framework that included minimum capital requirements, supervisory review processes, and market discipline for enhanced risk management.
What was a significant difference between Basel I and Basel II?
A significant difference is that Basel I used a standardized method for capital requirements, while Basel II allowed for more complex risk assessment through internal models.
What challenges did Basel II face during implementation?
Basel II faced challenges due to differences in national regulations and banking practices, leading to varied timelines for adoption across countries.