Basel2

The efforts of the Basel Committee on Banking Supervision (BCBS) to rewrite the standards governing the with child(p) adequacy of internationally active banks achieved a critical milepost in the publication of an agreed text in June 2004. The world(a) Convergence of Capital Measurement and Capital Standards: a revise Framework describes a to a greater extent nationwide measure and token(prenominal) standard for corking adequacy that national supervisory governing represented on the BCBS are now functional to experience through domestic rule-making and adoption procedures. The Basel II framework, or revise Framework, as the new-fashioned standard is frequently called, seeks to improve on the existing rules by aligning regulatory capital requirements to a greater extent closely to the underlying take chancess that banks face. In addition, the Revised Framework is recall to promote a more forward-looking approach to capital supervision, one that encourages banks to ident ify the risks they may face, today and in the future, and to memorise on or improve their ability to manage those risks.

As a result, the Revised Framework is intended to be more flexible and better able to evolve with advances in markets and risk counsel In releasing the Revised Framework pull through summer, the BCBS re-iterated its goal to maintain its active dialogue with the industry to turn back that the new framework keeps pace with, and can be employ to, on-going developments in the financial services sector. Two areas that the BCBS identified where affectionate work should be done concerned (1) finding a prudentially sound treatment under the Revised Framework for expos ures to tined default, where the risk of b! oth a borrower and a guarantor defaulting on the same obligation may be substantially let down than the risk of only one of the parties defaulting; and (2) applying the Revised Framework to certain(p) exposures arising from trading activities. Given the interest of both banks and securities firms in the potentiality solutions to these particular...If you want to get a full essay, order it on our website: OrderEssay.net

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