Basel II

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A second agreement developed by the Basel Committee on Banking Supervision in 2004 to promote international standards for measuring and ensuring the adequacy of a bank's capital.

The Basel Committee issued a compilation of Basel II and related guidance 2006.

Basel II was implemented across the European Union (EU) in 2008.

The changes introduced by Basel II included:

  • Refinements to the measurement of credit risk;
  • Quantifying the measurement of operational risk;
  • Permitting the use of banks' internal risk models, subject to regulatory approval; and
  • The concept of the Three Pillars of Capital.

(Basel II is occasionally written as Basel 2.)

Now superseded and updated by later Basel agreements, see links below.

See also