The Basel Accord(s) refers to the banking supervision Accords (recommendations to laws), Basel I and Basel II issued by the Basel Committee on Banking Supervision. They are named after the Swiss town, Basel in which the committee meets. Basel I is the term which refers to a round of deliberations by central bankers from around the world, and in 1988, the Basel Committee (BCBS) in Basel, Switzerland, published a set of minimal capital requirements for banks. ... Basel II is a round of deliberations by central bankers from around the world, under the auspices of the Basel Committee on Banking Supervision (BCBS) in Basel, Switzerland, aimed at producing uniformity in the way banks and banking regulators approach risk management across national borders. ... Basel Committee on Banking Supervision is an institution created by the central bank Governors of the Group of Ten nations (see G-10). ... Location within Switzerland Basel (English traditionally: Basle , German: Basel , French: Bâle , Italian: Basilea ) is Switzerlands third most populous city (166,563 inhabitants (2004); 690,000 inhabitants in the conurbation stretching across the immediate cantonal and national boundaries made Basel Switzerlands second-largest urban area as of 2003). ...

The Basel Committee

Consists of representatives from central banks and regulatory authorities of the G10 countries, plus others (specifically Luxembourg and Spain). The committee does not have the authority to enforce recommendations, although most member countries (and others) tend to do so. This means that recommendations are enforced through national (or EU-wide) laws, rather than as a result of the committee's recommendations - thus some time may pass between recommendations and enforcement. The Group of Ten or G10 is a group of industrially advanced countries. ...

The Basel Accord

The key Accord to come from the Basel Committee refers to capital adequacy - ensuring that financial institutions retain enough capital (see Tier 1 capital and Tier 2 capital) to protect themselves against unexpected losses. Tier 1 capital is the core measure of a banks financial strength from a regulators point of view. ... Tier 1 capital is the core measure of a banks financial strength from a regulators point of view. ... Tier 2 capital is a measure of a banks financial strength with regard to the second most reliable forms of capital, from a regulators point of view. ...

The first Basel Accord was issued in 1988 and sets out the basics - such as credit risk. This was updated in 1996 to cover market risk and to clarify and extend the first Accord. Credit risk is the risk of loss due to a counterparty defaulting on a contract, or more generally the risk of loss due to some credit event. Traditionally this applied to bonds where debt holders were concerned that the counterparty to whom theyve made a loan might default on... Market risk is the risk that the value of your investment will decrease due to moves in market factors. ...

Spelling

The Basel Committee is named for the Swiss town of Basel. In early publicatons, the committee sometimes used the English spelling "Basle" or the French spelling "Bale," names that are sometimes still used in the press. More recently, the Committee has deferred to the predominantly German population of the region and used the spelling "Basel."

See also

• Tier 1 capital
• Tier 2 capital
• Basel ii training
• Sarbanes-Oxley Act