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Unformatted text preview: The Basel Accords are agreements that were set by the Basel Committee on Bank Supervision (BCBS), which provide recommendations on banking regulations regarding three sectors: capital risk, market risk, and operational risk. Its main purpose is to make sure that financial institutions have enough liquidity to fulfill their responsibilities and be prepared for unexpected losses. Basel I is basically a form of negotiation by central bankers from all around the world. In 1988, there were a series of requirements for banks set by the Basel Committee (BSCBS) in Switzerland and in 1992 were imposed by law in the G-10 countries. The main focus of Basel I was on credit risk. Banks assets were divided into categories depending on their credit risk. The second Basel Accords is Basel II, which regulates and recommend on banking laws created by the Basel Committee on Banking Supervision. Its main purpose is to generate an international law that all banking regulators can use when they issue the regulations on how much money the banks need to put...
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- Spring '10