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What is Basel ii?
From the
Basel ii Accord
Basel ii
is a
framework, and the standards it contains have been endorsed by the
Central Bank Governors and Heads of Banking Supervision of the
Group of Ten countries.
It presents the outcome of the Basel Committee on Banking
Supervision’s work over recent years to secure international
convergence on revisions to supervisory regulations governing the
capital adequacy of internationally active banks.
Following the publication of the Committee’s first round of
proposals for revising the capital adequacy framework in June
1999, an extensive consultative process was set in train in all
member countries and the proposals were also circulated to
supervisory authorities worldwide.
The Committee subsequently released additional proposals for
consultation in January 2001 and April 2003 and furthermore
conducted three quantitative impact studies related to its
proposals.
As a result of these efforts, many valuable improvements have been
made to the original proposals.
The present paper is now a statement of the Committee agreed by
all its members. It sets out the details of the agreed Framework
for measuring capital adequacy and the
minimum
standard to be achieved which the national supervisory authorities
represented on the Committee will propose for adoption in their
respective countries.
The Basel Committee on Banking Supervision
is a committee of banking supervisory authorities that was
established by the central bank governors of the Group of Ten
countries in 1975. It consists of senior representatives of bank
supervisory authorities and central banks from
Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the
Netherlands, Spain, Sweden, Switzerland, the United Kingdom, and
the United States.
It usually meets at the Bank for International Settlements in
Basel, where its permanent Secretariat is located.
The Committee expects its members to move forward with the
appropriate adoption procedures in their respective countries. In
a number of instances, these procedures will include additional
impact assessments of the Committee’s Framework as well as further
opportunities for comments by interested parties to be provided to
national authorities.
The Committee intends the Framework set out here to be available
for implementation as of year end
2006. However, the Committee feels that one further year of impact
studies or parallel calculations will be needed for the most
advanced approaches, and these therefore will be available for
implementation as of year-end 2007.
This document is being circulated to supervisory authorities
worldwide with a view to encouraging them to consider adopting
this revised Framework at such time as they believe is consistent
with their broader supervisory priorities.
While the revised Framework has been designed to provide options
for banks and banking systems worldwide, the Committee
acknowledges that moving toward its adoption in the near future
may not be a first priority for all non-G10 supervisory
authorities
in terms of what is needed to strengthen their
supervision.
Where this is the case, each national supervisor should consider
carefully the benefits of the revised Framework in the context of
its domestic banking system when developing a timetable and
approach to implementation.
The fundamental objective of the Committee’s work to revise the
1988 Accord has been to develop a framework that would further
strengthen the soundness and stability of the international
banking system while maintaining sufficient consistency that
capital adequacy regulation will not be a significant source of
competitive inequality among internationally active banks.
The Committee believes that the revised Framework will promote the
adoption of
stronger risk management practices
by the banking industry, and views this as one of its major
benefits.
The Committee notes that, in their comments on the proposals,
banks and other interested parties have welcomed the concept and
rationale of the
three pillars
(minimum capital requirements, supervisory review, and market
discipline) approach on which the revised Framework is based.
More generally, they have expressed support for improving capital
regulation to take into account changes in banking and risk
management practices while at the same time preserving the
benefits of a framework that can be applied as uniformly as
possible at the national level.
In developing the revised Framework, the Committee has sought to
arrive at
significantly more risk-sensitive capital requirements
that are conceptually sound and at the same time pay due regard to
particular features of the present supervisory and accounting
systems in individual member countries.
It believes that this objective has been achieved.
The Committee is also retaining
key elements of the 1988
capital adequacy framework, including the general requirement for
banks to hold total capital equivalent to
at least 8%
of their risk-weighted assets; the basic structure of the 1996
Market Risk Amendment regarding the treatment of market risk; and
the definition of eligible capital.
A significant innovation of the revised Framework is the greater
use of assessments of risk provided by banks’ internal systems as
inputs to capital calculations. In taking this step, the Committee
is also putting forward a detailed set of minimum requirements
designed to ensure the integrity of these internal risk
assessments.
It is not the Committee’s intention to dictate the form or
operational detail of banks’ risk management policies and
practices.
Each supervisor will develop a set of review procedures
for ensuring that banks’ systems and controls are adequate to
serve as the basis for the capital calculations.
Supervisors will need to exercise sound judgements when
determining a bank’s state of readiness, particularly during the
implementation process.
The Committee expects national supervisors will focus on
compliance with the minimum requirements as a means of ensuring
the overall integrity of a bank’s ability to provide prudential
inputs to the capital calculations and not as an end in itself.
The revised Framework provides a
range of options
for determining the capital requirements for credit risk and
operational risk to allow banks and supervisors to select
approaches that are most appropriate for their operations and
their financial market infrastructure.
In addition, the Framework also
allows for a limited degree of national discretion
in the way in which each of these options may be applied, to adapt
the standards to different conditions of national markets.
These features, however, will necessitate substantial efforts by
national authorities to ensure sufficient consistency in
application. The Committee intends to monitor and review the
application of the Framework in the period ahead with a view to
achieving even greater consistency.
In particular, its
Accord Implementation Group (AIG)
was established to promote consistency in the Framework’s
application by encouraging supervisors to exchange information on
implementation
approaches.
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Become a
Certified Basel ii Professional (CBiiPro)
Basel ii Distance Learning and
Certification
The Cost:
US$ 297
What is included in this
price:
A.
The official presentations we use in our
instructor-led classes (1880 slides)
The
presentations have been updated after the Basel ii Amendment (July
2009, Enhancements to the Basel II framework, Supplemental
Guidance)
B. Up to 3 Online Exams
There is only
one exam you need to pass, in order to become a
Certified Basel ii
Professional (CBiiPro).
If you fail, you must study again
the official presentations, but you do not
need to spend money to try again. Up to 3 exams are included in
the price.
To
learn more you may visit:
www.basel-ii-association.com/Questions_About_The_Certification_And_The_Exams_1.pdf
www.basel-ii-association.com/Certification_Steps_CBiiPro.pdf
C. Personalized Membership Certificate printed in full colour.
Processing, printing, packing and posting to your office or home
To learn more:
www.basel-ii-association.com/Distance_Learning_Online_Certification.htm
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