Basel second edition of "Dead Before their dreams".

<P> Recently, one of the major highlights is the international Basel II came out the third edition of the draft. .July 26, the Basel Committee on Banking Supervision announced that 26 members of the central bank and banking regulators in the financial crisis, set to strengthen bank capital and liquidity risk management to reach a broad reform program. .The specific content of the program include: the definition of capital, counterparty credit risk management, debt capital leverage, assets, liabilities, liquidity standards. .There are also issues to be negotiated are: how to improve the capital ratios, and how to impose counter-cyclical buffer mechanism. .This large area of the reform program, known as the third edition of the Basel agreement. .</ P> <P> the Basel Committee on Banking Supervision is an international financial organization, subordinate to "the central bank's bank" Bank for International Settlements in Basel, Switzerland. .Basel Committee on Banking Supervision is mainly engaged in the coordination and development of international banking supervision policy, international exchange and provide a platform for consultation. .It is the most important results of the first edition of the Basel Protocol, Second Edition, and now the third edition. .</ P> <P> the third edition came out with the Basel Accord, a natural question is the second edition go? .In the U.S., the original dynamic of the Basel Accord have not seen the second edition of its debut, did not enter the agenda of major banks, has been replaced, and how is this going? .</ P> <P> talking about the second edition of the Basel Agreement, may be traced back to the first edition. .Basel II was born in 1988, first edition, it is the initiative of its national jurisdiction of the bank regulatory agencies to implement the minimum capital reserve requirements in order to guard against risk, to ensure the safety and soundness of bank runs. .This guide policy because of its simple, capital and risk-linked, not only by the ten member states was adopted by the Basel, also adopted by other non-member countries. .Basel Basel Committee created the first version of a unified international standards, coordination of regulatory policy precedent, opened a major international financial regulatory scene. .</ P> <P> blink of an eye over the past decade, ever-changing financial market, for those international banks, Basel II begin to show the first edition of its limitations. .The agreement provided for the risk of type too small, the line is too thick, making the capital and risk not linked closely enough and efficient capital allocation, resulting in banks there have been many capital arbitrage. .In addition, reasonable and effective to calculate the real risk, we must rely on a combination of advanced theory, diversification of assets and hedge between the properties are taken into account. .At that time, many big banks have been successfully used in their internal model portfolio risk management, pricing and capital allocation. .</ P> <P> call in the banking sector's lobbying, the New York Federal Reserve began the first edition of the work of the Basel II reforms, has done a lot of sample collection, the survey summed up, meeting coordination, with the Basel Committee, various .dealing with regulatory agencies and lobby groups work. .The first edition from 1998 Basel reform horn sounded, Basel 2006, the second edition of the dust has settled, the four U.S. banking regulators (Federal Reserve, currency control department, the Federal Deposit Insurance Corporation, savings and loan .will monitor the Department) beginning to end, go all out to actively participate in and treat it as top priority. .Finally, the second edition of the implementation of the Basel Accord very large and complex for different banks, the capital of three different calculation methods: the standard method, the IRB, senior law. .Among them, the standard method similar to the first edition of the Basel Agreement, only slightly more complicated; higher law, although high, did not achieve the combination of theoretical models using the height and mind. .In other words, Basel II selected for the second edition of a compromise between the first and between the combination of the three paragraphs of theoretical models. .</ P> <P> the state-owned banks in Europe before 2008, must complete the deployment of Basel II and implementation of the second edition. .Banking system is also step by step, establish a good system, configured personnel, have started reporting the new capital adequacy ratio under the agreement. .</ P> <P> but in the U.S., although the initiator of the second edition of the Basel Agreement, to the implementation of the implementation phase is delayed, hesitant. .Small and medium banks that no substantive change to the agreement, and adoption of new agreement to pay a considerable number of human material and financial resources, more harm than good, complete a regulatory burden. .The big banks did not respond positively, because they can not meet the requirements of the use of portfolio theory model. .</ P> <P> Finally, under international pressure, the four U.S. banking regulators in July 2008 reached a compromise to require large U.S. banks to implement Basel II version of the Higher Law; and the United States .small and medium banks can choose whether to adopt the Basel II standardized approach for the second edition. .Compromise also provides for several hours old and the new calculation method of the transfer, each transfer period is at least one year. .</ P> <P> exactly in 2008 is the world's banks are in precarious financial crisis, which also spare some time to Basel. .After the storm, which naturally this regulatory rules he's too short also. .Sure enough, the United States with the financial reform bill, the Basel Committee released the third edition of the agreement, strengthened its capital requirements. .</ P> <P> second edition from the Basel Accord died in the United States, we can see the limitations of international financial agreements. .First slowly, in dozens of countries the rationale for each side, each with different accounting systems and operational guidelines, is difficult to reach a consensus; the second is not enforceable, the Basel Committee is a no executive powers, no legal effect .international agencies, it only provides guidelines for the agreement, each country must finally decide whether to adopt their own. .</ P> <P> I hope the third edition of the Basel Protocol will not repeat the mistakes of the second edition - "the body die before their dreams." .</ P>.