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The Basel Committee formulates broad supervisory standards and guidelines and recommends statements of best practice in banking supervision (see bank regulation or "Basel III Accord", for example) in the expectation that member authorities and other nations' authorities will take steps to implement them through their own national systems.
It does not supersede either Basel I or II but focuses on reforms to the Basel II framework to address specific issues, including related to the risk of a bank run. The Basel Accords have been integrated into the consolidated Basel Framework, which comprises all of the current and forthcoming standards of the Basel Committee on Banking Supervision.
Basel III requires banks to have a minimum CET1 ratio (Common Tier 1 capital divided by risk-weighted assets (RWAs)) at all times of: . 4.5%; Plus: A mandatory "capital conservation buffer" or "stress capital buffer requirement", equivalent to at least 2.5% of risk-weighted assets, but could be higher based on results from stress tests, as determined by national regulators.
Basel (/ ˈ b ɑː z əl /, BAH-zəl; German: ⓘ), also known as Basle, [note 1] is a city in northwestern Switzerland on the River Rhine (at the transition from the High to the Upper Rhine). [4] Basel is Switzerland's third-most-populous city (after Zurich and Geneva), with 177,595 inhabitants within the city municipality limits. [5]
The BIS developed into a global meeting place for regulators and for developing international standards (Basel Concordat, Basel Capital Accord, Basel II and III). Through its member central banks, the BIS was actively involved in the resolution of the Latin American debt crisis (1982).
Basel I is the first Basel Accord. It arose from deliberations by central bankers from major countries during the late 1970s and 1980s. In 1988, the Basel Committee on Banking Supervision (BCBS) in Basel , Switzerland, published a set of minimum capital requirements for banks.
A final package of measures, known as Basel 2.5, enhanced the three pillars of the Basel II framework and strengthened the 1996 rules governing trading book capital was issued in July 2009 by the newly expanded Basel Committee. These measures included revisions to the Basel II market-risk framework and the guidelines for computing capital for ...
The Basel Committee describes these changes as completing the Basel III reforms, published in 2010–11, [2] and calls them "finalised Basel III post-crisis reforms". [3] These remaining reforms to prudential regulation of banks are known by various names in BCBS member jurisdictions (often including other Basel III reforms that remain to be ...