Basel Accord is the main global bank capital and risk supervision standard formulated by the Basel Committee. The Basel Committee is composed of the banking supervision authorities of 13 countries and is one of the four standing committees of the Bank for International Settlements. The capital requirements stipulated in the standards published by the Basel Committee are called risk-based capital requirements. 1988 In July, the first standard document was issued, which was called "1988 Capital Consistency Policy", also known as "Basel Accord". The main purpose is to establish minimum capital requirements to prevent credit risk. 1996, Basel I was revised and expanded to include the requirements of venture capital based on market risk. The Basel Committee discussed the importance of operational risk as a potential financial risk in 1998, and issued many standards and reports to solve operational risk in 200 1. In June, 2004, a new capital requirement standard was issued, which was called Basel Accord. Its purpose is to improve Basel I by introducing risk-based capital requirements that are more consistent with the risks faced by banks.
Legal basis: Basel agreement
Article 1 Strengthen the supervision of banks. Regulators can decide whether banks can operate reasonably through monitoring and put forward improvement plans. Regulatory constraints are included in the capital framework for the first time. The basic principle is that regulators should keep the capital adequacy ratio above the minimum level according to the risk status and external operating environment of banks, strictly control the capital adequacy ratio of banks, and ensure that banks have strict internal systems and effectively manage their own capital needs. Banks should establish an internal evaluation mechanism for the overall situation of capital adequacy ratio and formulate strategies to maintain the level of capital adequacy ratio with reference to the size of risks undertaken; At the same time, regulators have the responsibility to provide supervision for each project of the bank.
Article 2 The restriction of the market on the banking industry requires banks to improve information transparency so that the outside world can better understand their financial and management situation. The new Basel Capital Accord introduces the market restraint mechanism for the first time, allowing market forces to promote the stable and efficient operation of banks and maintain adequate capital levels. Steady and well-run banks can obtain funds from investors, creditors, depositors and other counterparties at more favorable prices and conditions, while banks with high risks are at a disadvantage in the market. They must pay a higher risk premium, provide additional guarantees or take other security measures. The reward and punishment mechanism of the market is conducive to prompting banks to allocate funds more effectively and control risks. The new Basel Capital Accord requires the market to supervise the security of the financial system, that is, banks are required to provide timely, reliable, comprehensive and accurate information so that market participants can make judgments accordingly. According to the New Basel Capital Accord, banks should disclose information including capital structure, risk exposure, capital adequacy ratio, capital internal evaluation mechanism and risk management strategy in a timely manner.
Answered on April 26, 2022
Chen Jiansheng
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