Commenced in January 2007
Frequency: Monthly
Edition: International
Paper Count: 30685
The Key Challenges of the New Bank Regulations

Authors: Petr Teply

Abstract:

The New Basel Capital Accord (Basel II) influences how financial institutions around the world, and especially European Union institutions, determine the amount of capital to reserve. However, as the recent global crisis has shown, the revision of Basel II is needed to reflect current trends, such as increased volatility and correlation, in the world financial markets. The overall objective of Basel II is to increase the safety and soundness of the international financial system. Basel II builds on three main pillars: Pillar I deals with the minimum capital requirements for credit, market and operational risk, Pillar II focuses on the supervisory review process and finally Pillar III promotes market discipline through enhanced disclosure requirements for banks. The aim of this paper is to provide the historical background, key features and impact of Basel II on financial markets. Moreover, we discuss new proposals for international bank regulation (sometimes referred to as Basel III) which include requirements for higher quality, constituency and transparency of banks' capital and risk management, regulation of OTC markets and introduction of new liquidity standards for internationally active banks.

Keywords: Risk management, BASEL III, bank regulation, Basel II

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1084438

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 1665

References:


[1] R. Barfield (2004, August). Basel II promises cheaper banking. PricewaterhouseCoopers (Online). Available: http://www.pwcglobal.com/images/gx/eng/fs/1004barfield.pdf
[2] Basel Committee on Banking Supervision. (2006, September). International Convergence of Capital Measurement and Capital Standards, A Revised Framework, Comprehensive Version (Online). Available: www.bis.org/publ/bcbs107.htm
[3] A. Crockett, (2005, August). Basel II: General Remarks. (Online). Available: http://www.amf.org.ae/vEnglish/storage/other/DG%20ADVISOR%20O FFICE/BANKS%20AUDITING%20PUBLICATIONS/Basel%20II%20 General%20Remarks.pdf#search=%22Basel%20II%3A%20General%20 Remarks%22
[4] J. ČernohorskÛ, "Transformace bankovního sektoru," in Proc. 3rd Annu. Conf. Economic policy in transition economies, Ostrava, 2002. pp. 23- 26.
[5] Credit Suisse. (2004, January). Basel II Implications for Banks and Banking Markets (Online). Available: http://www.imf.org/external/np/pp/eng/2005/072205.htm
[6] Czech National Bank. Banking Supervision 2005. Praha: Česká národní banka, 2006.
[7] H. Hannoun, (2010, February) TOWARDS A GLOBAL FINANCIAL STABILITY FRAMEWORK, guest speech, 45th SEACEN Governors- Conference Siem Reap province, Cambodia, 2010
[8] P. Hawk, (2006 September). Basel II Issues (Online). Available: www.bis.org/press/p031011.htm
[9] S. Heffernan, Modern Banking, 5th edition, Wiley, 2005.
[10] M. Mejstrik, M. Pecena, P. Teply. Basic Principles of Banking. Czech Republic : Karolinum press, 2008.
[11] D. Opiokello, (2006, September). Basel II and its Impact on Financial Services (Online). Available: http://www.bis.org/review/r060901f.pdf#search=%22%20Basel%20II% 20and%20its%20Impact%20on%20Financial%20Services%22
[12] PricewaterhouseCoopers. (2004, August). Study on the financial and macroeconomic consequences of the draft proposed new capital requirements for banks and investment firms in the EU (Online). Available: http://ec.europa.eu/internal_market/bank/regcapital/impact_en.htm
[13] L. Tepla, "Regulatorn├¡ r├ímec a o─ìek├ívané trendy bankovn├¡ho sektoru ─îR," in Proc. 1st Annu. Conf.. Currency, banking, financial markets, Bratislava, 2003, p.111.
[14] P. Teply, "Regulatory Risk and Issues of Basel II in Central European Economies," presented at Massey University, Palmerston North, New Zealand, June 23, 2006.
[15] P. Teply, The Truth About The 2008-2009 Crisis: A Hard Lesson for The Global Markets. VDM Verlag, Germany, 2010
[16] P. Teply, K. Divis, L. Cernohorska, "Implications of the New Basel Capital Accord for European Banks", E+M Journal, Czech Republic, 1/2007