The Reform Direction Of Baselii Accord Under Subprime Crisis And The Inspiration To China

Since the implementation of BaselⅠAccord in 1988, it has been accepeted as the international competition rules of bank industry. The Basel Accord has played an irreplaceable role in banking supervision and preventing financial crisis. But the effectiveness of Basel Accord has been controversial when the anticipated function can not be implemented during sevsral crisis. The BaselⅡAccord was also controversial since it was enacted in 2004. And the outbreak of subprime crisis raised new questions about the efficiency of BaselⅡ, which gained more attention to reevaluate the supervision framework. Compared with BaselⅠ, BaselⅡis a more professional system in capital adequacy supervision and financial risk protection. But there are still shortcomings of the BaselⅡexposed in the subprime crisis. In responses, the Basel committee issued tighter capital standards and tougher supervision to revise the weak standards during subprime crisis. And the Basel Committee issued the BaselⅢrules text in September 2010, which presented the framework of global regulatory standards on bank capital adequacy and liquidity. The paper based on a deep analysis on the challenges and inadequacies of BaselⅡAccord exposed during subprime crisis. Combined with the macroeconomics background, the paper also concluded several feasible suggestions on the improvement of BaselⅡrisk management.There are four parts of this paper. At the first part of the article, it briefly outlines the content of the BaselⅡAccord and the improvement compared with the BaselⅠ. In the second part, it discusses the defects and insufficients of the BaselⅡunder the background of the subprime mortgage crisis. The third part is mainly analysis of the measures introduced by the Basel committee on revising the defects of the Accord during subprime crisis. Based on the analysis of the previous chapter, make proposal for improvement of BaselⅡ. The last part provides several specific suggestions on China's banking risk management under full understanding and analysis of BaselⅡand BaselⅢ.Furthermore, the BaselⅢAccord was issued after the subprime crisis. The Basel committee adopts the supervision idea on improving the capital ratios and strengthening the supervision inspection. China's commercial banks have been making great progresses and also meeting many challenges of the implementation of China New Capital Accord in the latest years. The challenges come from multiple sources, such as the promotion of Internal Ratings-Based(IRB) approach on calculating credit risk and market risk, the primary discussion on operational risk in China and the further enhancement of the press test under BaselⅢCaptial Accord. The paper deepens the theme and value of research by combining international advanced theories and methods with the actual situation in China.