The Basel II Framework describes a more comprehensive measure and minimum standard for capital adequacy that national supervisory authorities are now working to implement through domestic rule-making and adoption procedures. It seeks to improve on the existing rules by aligning regulatory capital requirements more closely to the underlying risks that banks face. In addition, the Basel II Framework is intended to promote a more forward-looking approach to capital supervision, one that encourages banks to identify the risks they may face, today and in the future, and to develop or improve their ability to manage those risks. As a result, it is intended to be more flexible and better able to evolve with advances in markets and risk management practices.
The efforts of the Basel Committee on Banking Supervision to revise the standards governing the capital adequacy of internationally active banks achieved a critical milestone in the publication of an agreed text in June 2004.
The original Basel II document is available in:
English | French | German | Italian | Spanish
In November 2005, the Committee issued an updated version of the revised Framework incorporating the additional guidance set forth in the Committee's paper The Application of Basel II to Trading Activities and the Treatment of Double Default Effects (July 2005).
On 4 July 2006, the Committee issued a comprehensive version of the Basel II Framework. Solely as a matter of convenience to readers, this comprehensive document is a compilation of the June 2004 Basel II Framework, the elements of the 1988 Accord that were not revised during the Basel II process, the 1996 Amendment to the Capital Accord to Incorporate Market Risks, and the 2005 paper on the Application of Basel II to Trading Activities and the Treatment of Double Default Effects. No new elements have been introduced in this compilation.
Latest news
12 October 2007
The Basel Committee on Banking Supervision issued a consultative paper on Guidelines for Computing Capital for Incremental Default Risk in the Trading Book. This paper provides additional guidance on how the general principles for calculating the incremental default risk charge as required in paragraphs 718(xcii) and 718(xciii) of the comprehensive version of the Basel II Framework (July 2006) may be met and contains both guidance on how supervisors will evaluate internal models and fallback options deemed acceptable by the Committee. Banks are expected to fulfill the principles for the incremental default risk capital charge laid out in this document to receive specific risk model recognition. The Committee welcomes comments on all aspects of the consultative paper by 15 February 2008.
2 June 2006
The Basel Committee on Banking Supervision issued a paper on Home-host information sharing for effective Basel II implementation, which sets forth general principles for sharing of information between home country and host country supervisors in the implementation of the Basel II Framework. This paper was developed jointly with the Core Principles Liaison Group, which includes banking supervisors from sixteen non-Committee member countries, as well as the International Monetary Fund and World Bank. The paper highlights the need for home and host supervisors of internationally active banking organizations to develop and enhance pragmatic communication and cooperation with regard to banks' Basel II implementation plans, and also sets out practical examples of information that could be provided by banks, home supervisors and host supervisors.
24 May 2006
The Basel Committee on Banking Supervision issued a press release indicating that the calibration of the Basel II Framework (ie, 1.06 scaling factor for credit risk-weighted assets under the internal ratings-based approaches) will be maintained. This Committee's review of the calibration of the Framework was based on the results of the fifth Quantitative Impact Study (QIS 5), as well as QIS 4 which was carried out in some jurisdictions. A detailed report on the results of QIS 5 in G10 and non-G10 countries was published on 16 June 2006. National authorities will continue to monitor capital requirements during the period of Basel II implementation, and the Committee will monitor national experiences with the Framework.
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