Is Basel II Accord to Guard Against Financial Shocks?

Mihaela Gondor ()
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Mihaela Gondor: Universitatea "Petru Maior" din Tîrgu Mureș, Str. Nicolae Iorga, nr.1, Tîrgu Mures, MURES, 540088, România

Acta Marisiensis. Series Oeconomica, 2008, vol. 1, 87-104

Abstract: The world financial market is an extremely complex system that involves many different participants from local banks to the central bank of each nation and the investors. Due to its importance on the global economy and our everyday lives it is vital that it is functioning properly. Internationally, rules are set by the Basel committee, part of the Bank for International Settlements (BIS). Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision. The objective of Basel II is to modernize the existing capital requirements framework to make it more comprehensive and risk-sensitive, taking account of many modern financial institutions' thorough risk management practices. Basel II is an international business standard that requires financial institutions to maintain enough cash reserves to cover risks incurred by operations.

Keywords: Basel II Accord; Banking System; Financial Crisis. (search for similar items in EconPapers)
JEL-codes: E50 E58 G28 (search for similar items in EconPapers)
Date: 2008
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