Basel II

"Basel II" is the name that has been given to the drafting of new international capital adequacy rules for banks. The new Accord replaces the previous rules.

It will have been almost ten years from the decision to revise the capital adequacy rules to the date the Swiss implementation of Basel II finally comes into force at the start of 2007. The end-result is a rule-book that all those involved broadly support.

Admittedly, there are definitely points that could be criticised. For instance, for Switzerland it was maintained from the start that the existing capital base should at the very least be maintained under Basel II as well. In addition, a very detailed and quantified regulation governing the backing of risks with capital carries the danger that banking institutions will limit themselves to merely fulfilling the requirements and exploiting them to the full commercially – possibly at the expense of fully integrated risk monitoring. However, the drafting of the international accord and its subsequent transposition into Swiss law may in many respects serve as an example for other proposed regulation.

For the Cantonal Banks, Basel II entails a considerable number of changes. Overall, though, their reaction to the new rules is positive. The "menu approach", which offers various options, takes account of the different starting positions the Banks find themselves in. And thanks to regular and clear information, the Banks have been able to take all the necessary steps in good time. The Cantonal Banks are well prepared for Basel II.

Links to further information on Basel II

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