In
1988, the Basel committee introduced a new framework that
is often referred to as the Basel Capital Accord.
The 1988 Accord set minimum risk-based capital requirements
(8 per cent) for internationally active banks. Since 1988,
this framework has been progressively introduced not only
in member countries but also in nearly all other countries
with active international banks.
However,
the significant transformation of the business of banking,
financial markets, risk management practices and supervisory
approaches that had taken place since 1988 motivated the
committee''s plans to revise the 1988 Accord.
In
1999, the committee issued a proposal for a ''new capital
adequacy framework'' to replace the 1988 accord. A consultative
document was issued in January 2001, focusing on the "three
pillars" of minimum capital requirements; a supervisory
review process; and market discipline. The new accord
(Basel-11), once finalised, will replace the current 1988
Basel accord (Basel-1).
|