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International Regulations of Banks - Basel II, Pillar III - Essay Example

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This paper "International Regulations of Banks - Basel II, Pillar III" focuses on the fact that Pillar III addresses the issue of the market disciple through public disclosures. It represents a set of requirements that should improve market participants ability to assess the bank’s capital structure. …
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International Regulations of Banks - Basel II, Pillar III
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Download file to see previous pages Capital Structure corresponds to how much capital is held and in what forms such as common stock. The disclosure requirements for capital adequacy focus on a summary discussion of the banks approach to assessing its current and future capital adequacy. In the risk management area, the focus is on bank exposures to credit risk, market risk, the risk from equity positions and operational risk.

This essay will explore the above mentioned Pillar III of the BASEL II and its various elements however before discussing the Pillar III; I would be touching on some of the historical contexts of BASEL II in order to get a comprehensive view of the accord before elaborating on the Pillar III.

The advent of BASEL II is the turning point in the field of Banking as it demands complete transparency and rational approach towards making banking more risk-sensitive. BASEL II prompted me to look for this new and exciting avenue of Financial Risk Management as it not only involved a more prudent approach towards banking but it also demands a transparent and flexible banking structure to be in place to effectively manage the interests of various stakeholders in the banking sector.

Bank of International Settlements was established in Basel, Switzerland in 1930 and is considered as the world’s oldest international financial institution. It remains the principal centre of international central bank corporations around the world. The BIS was formed as a result of the treaty of Versailles which ended the First World War and BIS was basically established for repatriation of funds from Germany to allied forces. However, after the Breton Woods Agreement, the scope of BIS was greatly increased as a result of the growing emphasis being placed on the role of central banks in managing the financial system of the banks and a need for a regulating the internationally active banks were felt.  ...Download file to see next pagesRead More
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