initially adopt Basel II. It is expected that other central banks will also adopt this accord over a period of time. This spreading adoption indicates global acceptance in the near future as well as a precedent of accord implementation at banks across the world. BASEL II IMPLEMENTATION TIMELINES Following a series of revisions, it is expected Basel II will be finalized by the fourth quarter of 2003. Current statistics indicate Basel II will be applied to existing systems in all European banks and a few large internationally active US-based banks by January 1, 2006. During this three-year period, banks and supervisors must develop the necessary systems and processes to comply with the standards set forth by Basel II., Financial institutions must maintain a history of vital data sets built prior to the implementation date of Basel II, which will aid in seamless ômigration to Basel II. As a result, many countries have already started work on draft rules that would integrate Basel capital standards with their national capital regimes. The Basel II Accord aims to ensure effective risk management and security systems in the financial sector. It will therefore undergo rigorous revisions before its framework is finally solidified for implementation. THE BASEL II FRAMEWORK Basel II intends to provide more risk-sensitive approaches while maintaining the overall level of regulatory capital within the financial system. This can be achieved through a meticulously designed framework consisting of three mutually reinforcing pillars as summarized below: PILLAR 1: MINIMUM CAPITAL REQUIREMENTS Designed to help cover risks within a financial institution, the first pillar aims to set minimum capital requirements. It defines the current amount of capital and the minimum capital requirement allocated for risk-weighted assets. This pillar also emphasizes defining the capital amount by quantifying Credit Risk, Operational Risk and Market Risk. Measuring Credit Risk Credit Risk defines the minimum capital required to cover exposure to customers and counter parties. This risk can be measured using the following approaches: Standardized Approach - In this approach, the bank allocates a risk-weight to each of its assets and off-balance sheet positions. It then calculates a sum of risk-weighted asset values. A risk weight of 100% indicates that an exposure is included in calculation of assets at full value. The capital charge is equal to 8% of the asset
Alessandra Palladino Hair Color, Body Shape, Family Members, Father, Mother, Brother, Sister, Marriage and Affairs
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Alessandra Palladino Hair Color, Body Shape, Family Members, Father, Mother, Brother, Sister, Marriage and Affairs
Alessandra Palladino Hair Color, Body Shape, Family Members, Father, Mother, Brother, Sister, Marriage and Affairs
Alessandra Palladino Hair Color, Body Shape, Family Members, Father, Mother, Brother, Sister, Marriage and Affairs
Alessandra Palladino Hair Color, Body Shape, Family Members, Father, Mother, Brother, Sister, Marriage and Affairs
Alessandra Palladino Hair Color, Body Shape, Family Members, Father, Mother, Brother, Sister, Marriage and Affairs.
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