Basel Norms

  • On 26th June, 1974, a number of banks released payment of Deutsche Marks
  • It was the German currency that time
  • It was released to Herstatt bank in Frankfurt
  • There was a time difference in the zones of releasing and receiving so Herstatt stopped the operation
  • Germans forced Herstatt to liquidate after that
  • The respective parties didn’t receive the payment at all
  • Then the problem came in light that there were no firm laws in international banking
  • A committee was called under Bank of International Settlements (BIS)
  • They met at Basel, Switzerland in 1974
  • Three norms have been passed till now
  • Focus on risk weighted assets and capital adequacy ratio

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