Banks headquartered in nations that have signed the Basel Accords must have so many cents of capital for every dollar of credit extended to consumers and businesses.

In the banking sector worldwide, the Basel Accords are generally adopted by internationally active banks for tracking, reporting and exposing operational, credit and market risks.

Several years ago, the United States signed the Basel Accord, an international agreement that standardized banking requirements.

Responsible for the Basel Accords (Basel I and Basel II), this organization fundamentally changed Risk Management within its industry.

The Basel Accord proposes to permit banks a choice between two broad methodologies for calculating their capital requirements for credit risk.

Also, according to section 664 of original Basel Accord, in order to qualify for use of the AMA a bank must satisfy its supervisor that, at a minimum:

The calculation of the amount of risk-weighted assets depends on which revision of the Basel Accord is being followed by the financial institution.

As Parliament will be aware, the Basel Committee has announced a short delay in its timetable in reaching agreement on the new Basel Accord.

This is also known as the 1988 Basel Accord, and was enforced by law in the Group of Ten (G-10) countries in 1992 .

Basel I, that is, the 1988 Basel Accord, primarily focused on credit risk.