Basel Accord

Categories: Econ, International, Forex

Banks aren't unlike the rest of us. Sometimes they get a little crazy and bite off more than they can chew. Expanding too quickly, going into extra debt or over-extending on sub-prime loans have all been genuine risks for even the biggest and greatest banks out there.

Enter the Basel Accords. Established by the BCBS (Basel Committee on Bank Supervision, founded in 1974 in Basel, Switzerland), the Accords are comprised of three distinct sets of regulations that provide guidelines for banks concerning market, capital and operational risk. To promote general financial stability within the banking industry, the accords seek to ensure both unexpected losses and predicted financial obligations are all met by sufficient capital reserves.

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