can you explain the reason why Basel ii was developed
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Answer:
The Basel II Accord was published initially in June 2004 and was intended to amend international banking standards that controlled how much capital banks were required to hold to guard against the financial and operational risks banks face.
The accords are designed to ensure that financial institutions have enough capital on account to meet obligations and absorb unexpected losses. The latest accord is Basel III, which was agreed in November 2010. Basel III requires banks to have a minimum amount of common equity and a minimum liquidity ratio.
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Answer:
Basel II is the second of the Basel Accords, (now extended and partially superseded[clarification needed] by Basel III), which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.
The Basel II Accord was published initially in June 2004 and was intended to amend international banking standards that controlled how much capital banks were required to hold to guard against the financial and operational risks banks face. These regulations aimed to ensure that the more significant the risk a bank is exposed to, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability. Basel II attempted to accomplish this by establishing risk and capital management requirements to ensure that a bank has adequate capital for the risk the bank exposes itself to through its lending, investment and trading activities. One focus was to maintain sufficient consistency of regulations so to limit competitive inequality amongst internationally active banks.
Basel II was implemented in the years prior to 2008, and was only to be implemented in early 2008 in most major economies;[1][2][3] the financial crisis of 2007–2008 intervened before Basel II could become fully effective. As Basel III was negotiated, the crisis was top of mind and accordingly more stringent standards were contemplated and quickly adopted in some key countries including in Europe and the US.
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