About the Basel Accord
The Bank for International Settlements (BIS) introduced the new capital accord in 2001. 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.
The stated aims of the accord are to:
- Improve the banking sector's ability to absorb shocks that arise from financial and economic stress, whatever the source
- Improve risk management and governance
- Strengthen banks' transparency and disclosures.
Although the BIS introduced the Basel Accord to be implemented globally, different global regions, for example, United States, European Union and countries within regions, are allowed to customize the BIS regulations to comply with their own regulator(s) individual requirements, if these customizations are within the BIS Accord scope.