In Aprilanother document was issued explaining how Committee members intended to recognise the effects of multilateral netting. An important aspect of the Market Risk Amendment was that banks were, for the first time, allowed to use internal models value-at-risk models as a basis for measuring their market risk capital requirements, subject to strict quantitative and qualitative standards.
After several revisions, most recently in Septemberthe document now includes 29 principles, covering supervisory powers, the need for early intervention and timely supervisory actions, supervisory expectations of banks, and compliance with supervisory standards.
This led to the release of a revised capital framework in June Also known as the Basel Capital Accord, the New Basel Capital Accord is applied on a consolidated basis to internationally active banks to address the risk management practices for active financial institutions in the international arena.
Basel II summary The Basel II Accord was introduced following substantial losses in the international markets sincewhich were attributed to poor risk management practices.
The December versions were set out in Basel III: International framework for liquidity risk measurement, standards and monitoring and Basel III: A global regulatory framework for more resilient banks and banking systems.
The BCBS considered poor governance and risk management, inappropriate incentive structures, and an overleveraged banking industry as reasons for the collapse.
In Novemberan agreement was reached regarding the overall design of the capital and liquidity reform package.