What is The Basel Accord?

Maybe for you who daily engaged in the banking world are already familiar with the name Basel Accord. Yes, Bassel Accord is an International Standard which is used as the basis for the State to regulate the amount of bank financing in order to face the financial and operational risks that may arise. Basel Accord refers to the banking supervision Accords (recommendations on law, banking law and regulations). The Basel Committee comprises representatives from central banks and regulatory authorities of the G10 countries, as well as other countries (especially Luxembourg and Spain). The Committee recommendation does not force-rekimendasinya, although kbanyakan Member States tend to implement kabijakan-policy committee. This means that recommendations are implemented through the laws and regulations of national (or EU-wide), rather than as a result of the recommendations of the committee - although sometimes be among the recommendations and implementation of the law at the national level.

Basel Accord was created by the Basel Committee on Banking Supervision to avoid the problems encountered during the liquidation committee Herstatt Bank in Frankfurt in 1974. Liquidation is problematic because there are deals to New York left at the bank is liquidated. This occurs because of differences in time zones so that when the bank is liquidated, the transaction is unresolved. This encourages the countries of the G-10 established the Basel Committee on Banking Supervision.

Basel Committee on banking supervision to provide a forum for regular cooperation on banking supervisory matters. The goal is to increase understanding of key supervisory issues and improve the quality of banking supervision globally. The Committee tried to do by way of exchange of information on national supervisory issues, approaches, and techniques with a view to promoting common understanding. At this time, the committee uses common sense to develop the guidance (guidelines) and supervisory standards in areas where they are considered. Based on this, the committee's most recognizable because of international standards on capital adequacy (capital adequacy), the basic principles for effective banking supervision, and the concordat (harmony) in banking supervision across boundaries.

Committee members come from Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, Netherlands, Spain, Swediam, Switzerland, UK and U.S.. Countries represented by their central bank and also Authoritative with formal responsibility for supervising the prudential principles of banking business that is not a central bank. Committee chairman at the moment is Mr. Nout Wellink, president of Bank of the Netherlands.

The Committee encourages the various contacts and cooperation among its members and other banking supervisory authorities. The results are presented to the inspectors all over the world both in publications and in which there is no hint in banking supervision. Various contacts have been strengthened by an International Conference of Banking Supervisors (ICBS) held every two years.

Committee secretariat housed at the Bank for International Settlements in Basel, Switzerland, and its staff mainly from the professional supervisor with a temporary secondment from member institutions. Furthermore the implementation of the work, the secretariat of the committee and sub-committee of experts, ready to give advice to the various regulatory authorities in all countries. Mr Stefan Walter is the secretary general of the Basel Committee. (Geraldine Megan Tauran)

Until now there have been two standards of Basel I and Basel II standards that enhance coverage in Basel I.

1. Basel I, focused on the credit risk of the bank where the assets are classified in five categories depending on credit risk. Basel II was created with a more standard that is believed to contribute to keep the international financial system from problems that may arise if there is a fall of one or several large banks.
2. Basel II, uses 3 concepts, 1. minimum capital requirements, 2. assessment monitoring, and 3. market discipline.
   Basel I also use the three concepts above, but not all parts of the concepts used so incomplete, like the concept of minimum capital requirements, Basel I only consider the credit risk and market risk and the risk of passing operations.

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