Basel I Accord

E434154

The Basel I Accord is an international banking regulation framework that introduced standardized minimum capital requirements for banks to strengthen the stability of the global financial system.

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Basel I Accord canonical 1

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Statements (48)

Predicate Object
instanceOf Basel Capital Accord
banking regulation framework
international financial standard
adoptionYear 1988
alsoKnownAs Basel Capital Accord NERFINISHED
Basel I NERFINISHED
appliesRiskWeight 0 percent risk weight for certain OECD government exposures
100 percent risk weight for most corporate loans
20 percent risk weight for certain interbank exposures
50 percent risk weight for residential mortgages in many implementations
appliesTo commercial banks
internationally active banks
capitalAdequacyRatio 8 percent
capitalComponent Tier 1 capital
Tier 2 capital
capitalType regulatory capital
criticizedFor limited risk sensitivity
regulatory arbitrage incentives
simplistic risk-weight categories
definesConcept risk-weighted assets
doesNotExplicitlyCover market risk in original framework
operational risk
effectiveFrom 1992
focusesOnRiskType credit risk
geographicScope G10 countries initially
implementedThrough national banking regulations
influenced national capital adequacy regulations
inForceStatus partially superseded but still influential
inspiredBy concerns about international bank solvency
jurisdiction international
laterAdoptedBy many non-G10 countries
legalNature non-binding international standard
motivatedBy Latin American debt crisis NERFINISHED
perceived competitive inequality between banks in different countries
primaryGoal promote soundness of the banking system
reduce credit risk in banking
strengthen stability of the global financial system
regulator Basel Committee on Banking Supervision NERFINISHED
regulatorAffiliation Bank for International Settlements NERFINISHED
requires capital proportional to risk-weighted assets
riskWeightRange 0 to 100 percent
sector banking regulation
setsRequirement minimum capital adequacy ratio
standardizes risk weights for different asset classes
subjectArea financial stability policy
prudential regulation
supersededBy Basel II Accord NERFINISHED
Basel III framework NERFINISHED

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