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Basel II is an international initiative that requires financial services
companies to have a more risk sensitive framework for the assessment of
The Basel Capital Accord sets international capital adequacy standards.
In 1988, the Basel Committee on Banking Supervision established a method
of relating capital assets, using a simple system of risk weights and
a minimum capital ratio of 8%.
The planned implementation date for Basel II is December 2006 with parallel
running from January 2006. Banks, academics and politicians, particularly
in the USA are demanding changes to the draft rules, which they believe
are too complex, overly prescriptive and costly. These changes may in
turn cause delays to the implementation of the final Accord.
Basel II is based on the concept of 3 Pillars.
Basel II and Basel III not only affect traditional finance companies,
but they also influence other areas such as the cost of project finance
for Infrastructure Projects. You can read more here on Basel
III and Infrastructure.
Please use the sub sections links on the left or the content links
to find out more about Basel II.