Capital adequacy and risk management - premises for strengthening financial system stability

Bunea-Bontaş, Cristina Aurora and Lăzărică, Marinela and Petre, Mihaela Cosmina (2009): Capital adequacy and risk management - premises for strengthening financial system stability. Published in: Globalization and Higher Education in Economics and Business Administration, Conference Volume , Vol. 2, (December 2009): pp. 122-134.

Abstract

In the last decades, we have witnessed the progressive integration of European financial system, as a result of the cumulative effect of markets' liberalization, innovation and globalisation, and of harmonization of the regulations and implementation of financial reforms by the EU Member States. In this context, increased risk of financial instability necessarily requires the development of standards and codes of best practices in order to improve financial system integrity and stability, and to insure the health of the global banking and financial markets. From this perspective, the Basel II Accord represents a true revolution, aiming the improvement of the consistency of capital regulations internationally and better operational risk management practices. As a member of the EU, Romania is currently through the stages of implementation of Basel II, starting 1st of January 2008. As a central bank, NBR main objectives are: to adapt national legislation; to coordinate the efforts of credit institutions to develop new strategies regarding solvency, capital adequacy and measurement system for each risk category; to impose the disclosure requirements for financial reports and to adapt the IT system.

• Item Type: MPRA Paper
• Language: English
• Keywords: Basel II Accord, capital adequacy, financial system stability, minimum capital requirements, risk management, risk-weighted assets
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation; F - International Economics > F3 - International Finance > F33 - International Monetary Arrangements and Institutions; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

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