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Global Risks 2009, a new report from the World Economic Forum, identifies a deteriorating global economy, a hard landing in China, a collapse in asset prices, gaps in global governance and issues relating to natural resources and climate as the pivotal risks facing the world this year. “This report highlights the need for concerted action to mitigate risks that now more than ever are global in their nature and in their impact, as illustrated by the financial crisis,” said Sheana Tambourgi, Head of the Global Risk Network.

Basel II Implementation in Singapore

On 26 June 2004, the Basel Committee on Banking Supervision (BCBS) published its Revised Framework on “International Convergence of Capital Measurement and Capital Standards” (commonly referred to as “Basel II”).  Basel II has been designed as a more risk-sensitive framework for establishing minimum levels of capital for internationally active banks than the 1988 Basel Capital Accord (commonly referred to as “Basel I”).  Basel II comprises three “pillars”: Pillar 1 prescribes the minimum capital requirements to support a bank’s credit, market and operational risks.  Pillar 2 describes the accompanying supervisory review of a bank’s internal capital adequacy assessment.  It encourages banks to continually develop and use better risk management techniques to monitor and manage their risks, and to have processes for assessing their overall capital adequacy in relation to their risk profile.  Pillar 3 prescribes minimum disclosure to facilitate market discipline.

MAS supports the broad objectives of Basel II and believes that it will incentivise improvements in risk management, as well as complement MAS’ supervisory objectives.  MAS has implemented Basel II in Singapore for all Singapore-incorporated banks on 1 January 2008.


Basel II: International Convergence of Capital Measurement and Capital Standards: a Revised Framework
June 2004

Note: This document has been incorporated in the comprehensive version of International Convergence of Capital Measurement and Capital Standards: A Revised Framework, including the elements of the 1988 Accord that were not revised during the Basel II process, the 1996 Amendment to the Capital Accord to Incorporate Market Risks, and the 2005 paper on The Application of Basel II to Trading Activities and the Treatment of Double Default Effects.

1. This report presents the outcome of the Basel Committee on Banking Supervision’s (“the Committee”) work over recent years to secure international convergence on revisions to supervisory regulations governing the capital adequacy of internationally active banks. Following the publication of the Committee’s first round of proposals for revising the capital adequacy framework in June 1999, an extensive consultative process was set in train in all member countries and the proposals were also circulated to supervisory authorities worldwide. The Committee subsequently released additional proposals for consultation in January 2001 and April 2003 and furthermore conducted three quantitative impact studies related to its proposals. As a result of these efforts, many valuable improvements have been made to the original proposals. The present paper is now a statement of the Committee agreed by all its members. It sets out the details of the agreed Framework for measuring capital adequacy and the minimum standard to be achieved which the national supervisory authorities represented on the Committee will propose for adoption in their respective countries. This Framework and the standard it contains have been endorsed by the Central Bank Governors and Heads of Banking Supervision of the Group of Ten countries.