Basel II

Basel II is an international business standard that requires financial institutions to maintain enough cash reserves to cover risks incurred Basel II was released in 2004 and improved on Basel I, which was released in the 1988. Basel II offers more complex models for calculating regulatory capital.

Essentially, the accord mandates that banks holding riskier assets should have higher capital requirements than those maintaining safer portfolios. Basel II also requires companies to publish both the details of risky investments and risk management practices.

The full title of the accord is Basel II: International Convergence of Capital Measurement and Capital Standards: A Revised Framework.