Regulation Of International Banks (Basel Ii Accord)

Regulation Of International Banks (Basel Ii Accord)

Course Work

« 10. Regulation of international banks (Basel II Accord) »

Moscow 2010

Introduction 3

Regulation 4

Evolvement of Basel Accord 5

Central Bank Views on Basel II 7

Challenges to supervisors 7

Central Bank’s critique on Basel II 8

Basel II and Commercial Banks 9

Basel II Problems for banks 10

Unresolved questions 14

Recent chronological updates of Basel II 14
    September 2005 update 14
    November 2005 update 14
    July 2006 update 14
    November 2007 update 15
    July 16, 2008 update 15
    January 16, 2009 update 15
    July 8-9, 2009 update 15

BIBLIOGRAPHY: 16

Introduction

    Regulation on banking system is a comprehensive and crucial issue for government authorities because the banking system has an important position in the economy. Financial crisis, which can lead to default by depositors and bank itself, will provoke a bank run, resulting in the illiquidity. The vulnerability of banking to contagion will create the domino effect and finally cause the financial system collapse. Regulation, broadly including some forms of deposit protection and the corresponding prudential supervision of the bank, becomes very important. In this course paper, we will discuss the latter one to investigate the prudential regulation on banks.

    The growth of multinational banks and global financial market has brought the international prudential regulation to the fore. The ambiguous national border and the highly globalized financial market induce the contagion problem internationally and increase requirement to internationally harmonized banking regulation. The good communication and co-operation system ensures the effective international co-ordination and safety. The Basel Committee, consisting of 12 developed countries’ central banks, has established to “consider regulatory issues related to activities of international banks in member countries” and try to “prevent any international banking operation from...