Modern finance · 1950s–1990s
1988
Basel I: capital rules for banks
Regulators agree banks must hold capital of at least 8% of risk-weighted assets.
The Basel Committee's 1988 accord set a common minimum: banks' capital must be at least 8% of their risk-weighted assets.
💡 Why it made sense then
Banks in different countries competed under different rules, and thin capital made failures more likely.
Ideas it gave us
- 🏦 Capital requirements
Capital requirements are rules that make banks fund part of their lending with their own money (equity) so they can absorb losses without failing. Under the Basel rules the minimum is 8% of risk-weighted assets.
Practise with $10,000 in play money
Free. No real money involved.