Basel II

A new framework published by the Basel Committee on Banking Supervision in June 2004 for regulating the capital adequacy of banks. Replacing the current Capital Accord (also known as Basel I), Basel II offers implementing jurisdictions a more comprehensive and risk-sensitive framework that aligns regulatory capital requirements of banks more closely with the inherent risks they face. It consists of three pillars:

* minimum capital requirements

* supervisory review process

* market discipline.

See also basic approach, internal ratings-based approach and standardized (credit risk) approach.