Part I The Elements of Bank Financial Supervision, 3 Basel and International Bank Regulation
- Regulation of banks — Basel 1 — Basel 2 — Basel 3 — Risk adjusted assets — Basel committee on Banking Supervision
This chapter begins by discussing the Basel committee and the Basel Accord. It details how the Basel committee, an organization with no powers, constitution, or even legal existence, became the dominant power in bank regulation. The Basel Capital Accord of 1988 set out a simple weighting system for different types of assets and standardized the rules as to what should count as capital. While the 1988 Accord was applied initially only to internationally active banks in the G10 countries, it quickly became acknowledged as a benchmark measure of a bank's solvency and is believed to have been adopted in some form by more than 100 countries. The remainder of the chapter covers policy responses to the recent financial crisis, Basel 2.5, Basel 3 framework document, and other initiatives.