August 1, 2001
The main objectives of this new accord are to foment safety and soundness in the financial system, enhance the competitive quality of the banks, and include approaches to capital adequacy that are appropriately sensitive to the degree of risk involved in a bank's position and activity. Although the new accord is primarily focused on internationally active banks, it will indirectly impact smaller, less complex institutions.
A major theme of the proposed accord addresses minimum capital requirements. Capital, defined as equity that provides a permanent source of revenue for shareholders and funding for the bank for further growth, ratios will remain at a minimum requirement of 8%. Capita
The proposed Basel Capital Accord will have far-reaching implications for Latin American banks' capital requirements, risk management and financial disclosure. It marks a decisive step away from a "one size fits all" supervisory approach to capital.