Basel II: A Worldwide Challenge for the Banking Business is a new KPMG white paper describing the significance of the Basel II Capital Accord.
To be implemented by 2006, the New Accord redefines how banks worldwide calculate regulatory capital and report compliance to regulators and the public.
Designed for "C-class" executives, board members, and other leaders, the paper will explain that for banks worldwide, Basel compliance is a risk management challenge with strategic business implications, rather than solely a regulatory compliance issue. Intended to improve safety and soundness in the financial system, Basel II places increased emphasis on banks' internal control and risk management processes and models as well as the supervisory review process and market discipline. The complexity of the new Accord, and its interdependencies with International Financial Reporting Standards and other regulations, makes implementation by 2006 a highly complex project.
The white paper summarises the Basel Committee's objectives in expanding on 1988 Capital Accord, explains the importance of its new three-pillar framework for determining capital adequacy, and summarises the effects, risks, and challenges for banks, their customers, regulators, ratings agencies, and the global capital markets. It also describes an approach to implementing Basel II.
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