TWN Global Economy Series no. 18 Basel 2 at a Time of Financial Peril By ANDREW CORNFORD Publisher: TWN (ISBN: 978-983-2729-87-7) Year: 2009   No. of pages: 64

ABOUT THE BOOK

Basel 2 is an internationally agreed framework for assessing the capital adequacy of banks. The framework has two objectives: to ensure the strength and soundness of banking systems, and to help equalise cross-border competition between banks by eliminating competitive advantages due to differences among countries in their regimes for capital adequacy.

As the most ambitious international agreement on banks’ risk management Basel 2 has been attributed a key role in the reform agenda responding to the financial crisis which began in 2007. However, the provisions of the 2006 text of Basel 2 have been subjected to renewed scrutiny in the context of the weaknesses of financial systems highlighted by the crisis. As a result even as introduction of Basel 2 in different countries has begun, the rules themselves are being revised and extended.

This book is concerned with seven aspects of Basel 2: (1) its rationale and origins; (2) the process leading to the agreement, including the way in which problems and criticisms which emerged during drafting were handled; (3) data on the introduction of Basel 2 in different countries; (4) the quantitative exercises designed to estimate Basel 2’s effects; (5) the global pattern of introduction in relation to Basel 2’s objectives; (6) the way in which Basel 2 addresses the control of banking risks; and (7) the agenda for possible future actions concerning subjects closely related to Basel 2.

ABOUT THE AUTHOR

ANDREW CORNFORD, formerly an UNCTAD economist specialising in international financial markets and regulation, is now Associate Commentator at the Geneva-based Observatoire de la Finance, an organisation which through its publications and educational programmes promotes debate and new thinking concerning the contribution of the financial sector to the common good.

Contents

1. INTRODUCTION 

2. RATIONALE AND ORIGINS           

3. EARLY DRAFTS AND CRITICAL REACTIONS         

4. REVISIONS AND GREATER FLEXIBILITY

5. PROGRESS WITH INTRODUCTION OF BASEL 2

6. ESTIMATES OF BASEL 2’S QUANTITATIVE IMPACT

7. THE PATTERN OF INTRODUCTION AND OBJECTIVES OF BASEL 2 

8. BASEL 2 AND THE CONTROL OF BANKING RISKS 

A. Supervisory Capacity and Internal Controls

B. Models of Borrower-lender Relations

C. Securitisation Exposures       

D. Liquidity Risk           

9. ELEMENTS OF A FUTURE AGENDA

Annex. Analytics and Supervisory Requirements of the IRBA 

References           

PRICE
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US$8.00 for Third World countries
RM10.00 for Malaysia
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