An accord, implemented in 2004, that supplants the Basle Convergence Accord of 1988. It establishes a new framework for defining risk capital and weightings, based to a greater extent than previously on credit ratings and internal models. It also puts in place a supervisory process to ensure that banks have adequate internal systems to understand and establish their capital at risk and assess its adequacy. There are also additional requirements for disclosure of risk-related information. Under the EU's Capital Requirements Directive, all EU firms in the financial services industry have to apply the Basle II rules from 1 January 2008.
Subjects: Financial Institutions and Services.