Basel Accords
The Basel Accords refer to the banking supervision Accords (recommendations on banking regulations) issued by the Basel Committee on Banking Supervision (BCBS). Basel I was the result of deliberations by central bankers from major countries around the world. In 1988, the Basel Committee published a set of minimum capital requirements for banks. This is also known as the 1988 Basel Accord, and was enforced by law in the Group of Ten (G-10) countries in 1992. A new set of rules known as Basel II was later developed with the intent to supersede the Basel I accords. Basel III  was developed in response to the financial crisis of 2007–2008. It does not supersede either Basel I or II but focuses on reforms to the Basel II framework to address specific issues, including related to the risk of a bank run. The Basel Accords have been integrated into the consolidated Basel Framework, which comprises all of the current and forthcoming standards of the Basel Committee on Banking Supervision. The Basel Committee on Banking Supervision. Formerly, the Basel Committee consisted of representatives from central banks and regulatory authorities of the Group of Ten countries plus Luxembourg and Spain. Since 2009, all  of the other G-20 major economies are represented, as well as some other major banking locales such as Hong Kong and Singapore. The Committee does not have the authority to enforce recommendations, although most member countries as well as some other countries tend to implement the Committee's policies. This means that recommendations are enforced through national (or EU-wide) laws and regulations, rather than as a result of the committee's recommendations - thus some time may pass between recommendations and implementation as law at the national level. The regulatory standards published by the committee are commonly known as "Basel  Accords."They are called the Basel Accords as the BCBS maintains its secretariat at the Bank for International Settlements in Basel, Switzerland and the committee normally meets there. The Basel Accords is a set of recommendations for regulations in the banking industry. Basel I: the Basel Capital Accord. The Basel Capital Accord was published in 1988 covering capital requirements for credit risk. The Accord was augmented in 1996 with a framework for market risk, which included both a standardsied approach and a modelled approach, the latter based on value at risk. Basel II: the new capital framework. Basel II was  a new capital framework, which was published in 2004 and intended to supersede the Basel I framework. It introduced "three pillars": Capital requirements for operational risk were introduced for the first time. The standards were revised several times including the Basel 2.5 revisions to introduce stressed VaR and IRC for modelled market risk in 2009/10. Bank regulators in the United States took the position of requiring a bank to follow the set of rules (Basel I or Basel II) giving the more conservative approach for the bank. Because of this it was anticipated that only the few very largest US  banks would operate under the Basel II rules, the others being regulated under the Basel I framework. However Basel II standards were criticised by some for allowing banks to take on too much risk with too little capital. This was considered part of the cause of the US subprime mortgage crisis that started in 2008. Basel III: responding to the financial crisis. Following the financial crisis of 2007–2008, the Basel III reforms were published in 2010/11. The standards set new definitions of capital, higher capital ratio requirements, and a leverage ratio requirement as a "back stop" measure. Risk-based capital  requirements (RWAs) for CVA risk and interest rate risk in the banking book were introduced for the first time, along with a large exposures framework, a revised securitisation framework, and a revised standardised approach to counterparty credit risk (SA-CCR) for exposure to derivative transactions. A specific framework for exposures to central counterparty clearing was introduced. In the following years, the Basel Committee published regulatory standards for the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR); and updated the standards for market risk, following a “Fundamental Review of the Trading Book”. The standards published by the Basel Committee  in 2017, commonly known as Basel 3.1, cover further reforms of the existing framework.