Basel Accords

The Basel Accords are a set of international banking regulations developed by the Basel Committee on Banking Supervision (BCBS) to strengthen the regulation, supervision, and risk management of banks. The accords aim to ensure that financial institutions have enough capital on hand to meet obligations and absorb unexpected losses. There have been three main versions: Basel I, Basel II, and Basel III. Each accord introduced more stringent requirements on capital adequacy, stress testing, and market liquidity risk. These accords are critical for maintaining global financial stability and preventing banking crises.

Example

Basel III, implemented after the 2008 financial crisis, introduced higher capital requirements and stricter rules on leverage and liquidity to enhance bank resilience.