Basel Agreement Meaning

12 Sep 2021

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Basel Agreement Meaning

In September 2010, the Group of Governors and Supervisors (GHOS) announced higher minimum capital requirements for commercial banks, preceded by an agreement reached in July on the overall organisation of the capital and liquidity reform package, now known as “Basel III”. In November 2010, the new capital and liquidity standards were approved at the G20 summit in Seoul and adopted at the Basel Committee meeting in December 2010. Following the collapse of Lehman Brothers in 2008 and the ensuing financial crisis, BCBS decided to update and strengthen the agreements. The BCBS considered poor governance and risk management, inadequate incentive structures and an over-indebted banking sector to be causes of the collapse. In November 2010, an agreement was reached on the overall organisation of the capital and liquidity reform package.