BASEL II: PROBLEMS AND USAGE

The Basel Committee did not change the previous editions of the Capital
Accord, but made capital calculation more complex and added new elements
in this process, making the capital assessment process more sensitive
to risks. It helps improve the risk management practices in banks and increases
the transparency of their activity.
This agreement states that, in fact, there is no universal method of
capital calculation for all countries. Therefore, it gives certain freedom to
different countries connected with the Basel’s II requirements implementation.
The Committee expects its members to move forward with the appropriate
adoption procedures in their countries in the nearest time. Speaking
of the terms of Basel’s implementation, the World Bank and the International
Monetary Fund suggest for every country to solve this problem independently,
taking into consideration the priorities and abilities of the national
authorities on banking supervision.
However, the period for implementation of the Basel’s II standards for
Europe was determined as a year-end 2007, in Russia it was decided to implement
these procedures not earlier than 2008-2009, in Ukraine this term
was prolonged to 2016. Today there is a significant discrepancy in national
banking systems concerning the new Capital Accord implementation. At the
same time many experts claim that financial crises occurred in the conditions
when banks were adhering to the Basel’s requirements. But these
requirements could not adequately take into account all types of banking
risks in the modern conditions of credit intermediation. As a result of the
imperfection of the existing mechanisms the risks of banks were not properly
revealed and quantitatively defined in due time. With the attention of
supervising authorities focused on liquidity, the increasing changes in
banking risks and market risk increases were not adequately analyzed.
Considering all this we can come to the conclusion that now there is a need
in accelerated implementation of the new agreement on capital requirements
– Basel II.
That is why today we have an urgent need to investigate the implementation
of the “International Convergence of Capital Measurement and
Capital Standards: A Revised Framework” in national banking systems.
The monograph studies the problems of the Basel’s implementation in
the economically developed countries (by using the examples of Germany),
as well as in countries, which are making the first steps in implementing
the requirements of this agreement. In our opinion, the participation of authors
from the countries with different levels of the Basel implementation
makes the monograph more interesting and gives an opportunity for some
comparisons.
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