28-07-2012, 10:39 AM
Basel Committee ppt
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About the Basel Committee
The Basel Committee on Banking Supervision provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. It seeks to do so by exchanging information on national supervisory issues, approaches and techniques, with a view to promoting common understanding. At times, the Committee uses this common understanding to develop guidelines and supervisory standards in areas where they are considered desirable. In this regard, the Committee is best known for its international standards on capital adequacy; the Core Principles for Effective Banking Supervision; and the Concordat on cross-border banking supervision.
The Committee's members come from Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong SAR, India, Indonesia, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The present Chairman of the Committee is Mr Stefan Ingves, Governor of Sveriges Riksbank.
Background to Basel III
The existing approach to capital regulation in the U.S. and E.U. – based on so-called “Basel I” and “Basel II” – was identified by many regulators and commentators as one of the key factors contributing to the financial crisis.3 Under the pre-crisis capital adequacy rules, the minimum regulatory capital levels of banks were insufficient in relation to the exposures and actual losses of the banks suffered during the financial crisis. Also the quality of regulatory capital appeared often insufficient to absorb bank losses effectively. The capital adequacy rules of Basel I and Basel II did not adequately capture risks posed by bank exposures to transactions such as securitizations, derivatives and repurchase agreements or take into account the systemic risks associated with the build-up of leverage in the financial system. Moreover, Basel I and II focused on capital only, with no internationally agreed quantitative standards for liquidity.
BASEL III
It is a global regulatory standard on bank capital adequacy, stress testing and market liquidityrisk agreed upon by the members of the Basel Committee on Banking Supervision in 2010-11. This, the third of the Basel Accords (Basel I, Basel II) was developed in response to the deficiencies in financial regulation revealed by the late-2000s financial crisis. Basel III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage.