Basel 1 2 and 3 Essay Example | Topics and Well Written Essays - 3000 words

Basel 1 2 and 3 - Essay ExampleBasel I, II, and III agreements have given birth to a new era of transnationalist banking cooperation. through and through technical, qualitative and quantitative analysis, these agreements have assisted in harmonization of banking supervision, capital adequacy standards and regulation across the eleven member states of the Basel Group and the emerging economies. opposed to this, the strength of these agreements-their technical and qualitative benchmarks limit the comprehension of these accords within policy circles causing confusion among people while interpreting them and wrongly applied to majority of the worlds political economies. However, even in situations where the Basel system has been rightly applied, neither accord has secured long-term stability within nations banking system or sector. Therefore, a full comprehension of the intentions, rules, and shortcomings of the three Basel accords is significant in assessing their impact on internati onal banking and financial system.With the recent collapse or major localizement banks, such as Bears Sterns, Lehman Brothers, AIG and others regulation has become increasingly important in todays economy. The lack of regulation allowed these banks to borrow massive amount of capital and invest in high-risk securities. The Basel Committee attempted to force these banks to hold cash reserves in order to prevent a total banking collapse sadly, the international banking system thwarted any attempt to do this thus making the collapse inevitable.The Basel I accord was a set of global or international banking regulation installed by the Basel committee to enhance bank supervision, which laid down the minimum capital requirement of banks and other financial institutions with the aim of minimizing credit risk. Banks that operated globally are required to maintain minimum amount of capital based upon a percentage of risk-weighted assets. After the Basel committee in Switzerland, the G-10 m embers started to discuss