The Basel III news

The newspaper is full of Basel III news. But what exactly is this Basel III?

Let’s dive into the universe of Basel.

Basel Accord- A set of regulations standardized by the Basel Committee on Bank Supervision (BCBS), which provides recommendations on banking regulations in regards to capital risk, market risk and operational risk. The purpose of the accords is to nail down that financial institutions have enough capital on account to meet accountableness and absorb unexpected losses.

Basel Committee on Banking Supervision The Basel Committee on Banking Supervision is a forum which provides regular cooperation on banking supervisory matters. The Committee’s Secretariat is located at the Bank for International Settlements in Basel, Switzerland, and is staffed mainly by professional supervisors on temporary assistance from member institutions. It has 28 committee members.

Basel I- Basel I represents a set of international banking regulations established by the Basel Committee on Bank Supervision, which set out the minimum capital requirements of financial institutions with the goal of minimizing credit risk. Banks that operate internationally are required to maintain a minimum amount (8%) of capital based on a percent of risk-weighted assets.

Basel II- Basel II is the second of the Basel Committee on Bank Supervision’s recommendations. The purpose of Basel II was to create standards and regulations on how much capital financial institutions must have put aside. Banks need to put aside capital to reduce the risks associated with its investing and lending practices

Basel III- Basel III is part of the continuous effort made by the Basel Committee on Banking Supervision to enhance the banking regulatory framework. It builds on the Basel I and Basel II documents, and seeks to improvise the banking sector’s ability to deal with financial and economic stress, improve risk management and empower the banks’ transparency. A focus of Basel III is to foster greater resilience at the individual bank level in order to reduce the risk of system wide shocks.

Basel Committee has swimmingly brought the Banking sector worldwide under a single umbrella of regulations creating a standardized style for banking operations. Furthermore the committee is actively working with member as well as non-member countries to strengthen the international banking scenario.

Click here for government certification in Accounting, Banking & Finance