BASEL

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BASEL refers to the Basel Committee on Banking Supervision, which is an international forum of banking regulators that was established in 1974 by the central bank governors of the Group of Ten countries. The committee’s mission is to enhance the soundness and stability of the international banking system by promoting effective banking supervision, risk management, and regulatory standards.

One of the committee’s most significant contributions has been the development of the Basel Accords, which are a set of international standards for banking supervision and regulation. The Basel Accords are designed to ensure that banks maintain adequate capital levels and manage their risks effectively in order to promote financial stability.

The Basel Accords consist of three main agreements, known as Basel I, Basel II, and Basel III. Each of these agreements represents an updated version of the original Basel Accord and includes more stringent standards for risk management and capital adequacy.

Basel I, which was introduced in 1988, established a minimum capital requirement for banks based on the credit risk of their assets. Basel II, which was introduced in 2004, added more sophisticated risk management standards, including requirements for banks to develop their own internal models for measuring and managing credit risk. Basel III, which was introduced in 2010, introduced additional requirements for banks to hold more and better quality capital to absorb losses during times of financial stress.

The Basel Committee continues to play an important role in shaping international banking regulation and promoting financial stability. Its work is closely watched by banks, financial regulators, and policymakers around the world.

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