What is the bank for international settlements?

Bank for International Settlements (BIS) is an international bank effectively. It performs a free -like role in the UN in politics. Its main duties are coordination of international banking policies, regulation of capital levels between banks and the provision of banking services to national central banks. In one stage, part of the BIS was owned by private investors and traded on stock markets. Since 2010, the bank has been owned exclusively by national central banks. One of the main examples is reserve regulations. These determine how many deposits led by the savior in the bank must be held tban in cash at the same time. This is designed to reduce the risk that the bank will run in cash if it runs in the bank, which is when many saver try to choose resources at the same time.

Bank for international settlements supervised the creation of Basel agreements. These were the agreements of the main countries that require each bank to haveAnd the minimum ratio between their main capital, which is the money they have from the sale of shares for the public and their asset. Although it may seem special as a problem as a problem, agreements take into account the fact that many assets have a certain degree of risk, in particular that the money that the bank lent to the debtors may not be paid.

Accord covers two types of capital, known as Tier 1 and Tier 2. Level 1 consists mainly of the nominal value of the bank's shares and the actual cash, which it has at hand in the form of reserves. The 2 -capital level covers, which are considered less reliable, such as preferred stocks or increase in value for asset, such as the market value of buildings, increases over time.

Basile agreements require level 1 bank capital to be at least 4% of their risky weighted assets and to combine its level 1 and level 2 is at least 8% of its risky weighted assets. Risk-considered means that unprocessed numbers are modified to match howIt is likely that the bank will get the money back. For a safe asset, such as a government bond, the total value of the asset may be included in the total. For a more risky asset, such as unsecured loan to the customer, only a small part of the value of the asset will be included in the total number.