The Basel Committee: a brief history

Following bank failures in both Germany and the United States in 1974, the central bank governors of the G10 countries set up a committee to improve the quality of banking supervision worldwide. The Basel Committee on Banking Supervision, as it is now known, draws its members from central banks and supervisory authorities in 27 countries. Chaired by Stefan Ingves, Governor of Sveriges Riksbank, the Committee reports to the central bank Governors and Heads of Supervision of its member countries.

The Committee itself has no supervisory authority, and its conclusions have no legal force. Rather, it formulates supervisory standards and guidelines that individual national authorities may adopt and implement through detailed legislative or other arrangements as suited to their own national systems.

In 1988, the Committee announced the Basel Capital Accord. Known as Basel I, this consisted of a credit risk measurement framework with a minimum capital standard of 8%. In June 1999, the Committee issued a proposal for a revised Capital Adequacy Framework consisting of three pillars: minimum capital requirements; supervisory review of an institution's internal assessment process and capital adequacy; and effective use of disclosure to strengthen market discipline.

The Committee then turned its attention to the market risk arising from banks' trading activities. In June 2006, the revised capital adequacy framework was combined with recommendations for the capital treatment of banks' trading books. By March 2012, the Revised Capital Framework - or Basel II - had been fully implemented in 21 of the 27 Committee countries.

In response to the financial crisis of 2008, the Committee and its oversight body developed a reform programme to address the lessons of the crisis, which delivers on the mandates for banking sector reforms established by the G20 at their 2009 Pittsburgh summit. Collectively, the new global standards to address both firm-specific and broader, systemic risks are referred to as Basel III (International framework for liquidity risk measurement, standards and monitoring).

To involve a wider group of countries with the work pursued in Basel, the Committee has always encouraged contacts and cooperation between its members and other standard-setting bodies. Contacts are further strengthened by the International Conferences of Banking Supervisors (ICBS) which take place every two years.

The Committee's Secretariat is provided by the Bank for International Settlements in Basel. The 17-person Secretariat is staffed mainly by professional supervisors seconded from member institutions.