Bank
Regulation and Supervision 2-------Basel Committee
Yesterday is
Valentine Day. So first, happy Valentine everyone!!
Anyway, today I
want to say something about Basel Committee.
Basel Committee is
an abbreviated form of Basel Committee on Bank Supervision. It was established
by Group of Ten at the end of 1974. So what is Group of Ten? The Group of Ten
is made up of 8 countries which are participated in IMF, Belgium, Canada, France, Italy, Japan, the Netherlands, the United Kingdom, and the United States,and other
two central banks of German and Sweden. Basel Committee is also a formal institution
of Bank for International Settlement，which can be written as BIS. Its website is http://www.bis.org/bcbs.[i]
The purpose of
Basel Committee is to exchange the information of every country’s regulatory
arrangement, to improve the effectiveness of the international banking
supervisory techniques，to set the minimum standards of capital adequacy ratio, and to study
the effectiveness of establishing standards in other areas.
Let us say
something about Basel Accord. Basel Accord is an Agreement on a unified
international bank capital calculation and capital standards. It has Basel
Accord 1, Basel Accord 2, and Basel Accord 3. The first accord was established
in 1975, which was quite simple. It emphasizes two points: First, any foreign
institutions of banks cannot escape regulation. Second, it stated clearly about
shared responsibilities of home and host countries. The second accord makes a
substantial modification to the Basel Accord 1. It points out three basic foothold：Minimum Capital Requirements, Supervisory
Review Process, and Market
Discipline. In 2010, Basel Committee announced that they had reached
an agreement on the content of Basel III. In Basel III, some requirements of
leverage ratio, flow leverage ratio, and etc. have been raised in order to
reduce the liquidity risk of banks’ system and strengthen the ability to resist
the financial crises.
[i] http://www.bis.org/bcbs/about.htm
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