Basel II: The Revised International Capital Framework

Introduction Basel II was introduced in 2004 as the previous contract was called the Basel Agreement. This new contract is considered more effective as it aims to address the risks of three major categories: credit risk, market risk and operational risk. The Basel Committee believes that banks can withstand these risks through appropriate capital levels. But Basel's approach to creating these risks is somewhat misleading.

1 After many years of debate, after years of debate the Basel Banking Supervision Committee has reached an agreement called Basel II. It introduced a major revision of the 1988 initial agreement on capital measurement and international convergence of capital standards. The most obvious change is rich processing of credit risk in bank capital requirements.

Basel II is the second of the Basel Accords and is a banking law and regulatory recommendation issued by the Basel Committee on Banking Supervision. Basel II (officially known as "international convergence of capital measurement and capital standards: a revised framework") officially announced in June 2004 has a new set of international standards that define the lowest level It is a best practice. In addition to how capital banks need to be deployed, banks must also protect against the various financial and operational risks faced by banks. In other words, banks need to maintain minimum capital levels, ensure that they fulfill their obligations, compensate for accidental losses and increase public confidence in the international banking system . Basel II is considered an international standard that helps protect the international financial system from the types of problems that may arise when a major bank or bank of banks fails.