The Basel III Accord is a set of international banking regulations developed by the Basel Committee on Banking Supervision (BCBS). It was formulated in response to the financial crisis of 2007-2008 and aims to improve the banking sector's resilience to financial and economic stress and improve its risk management by: Increasing capital adequacy requirements: Banks need to hold more capital relative to their risk-weighted assets to absorb potential losses during financial stress.
Enhancing liquidity standards: Banks need to maintain a sufficient level of liquid assets to meet their short-term obligations.
Strengthening risk management practices: Banks are required to implement more robust risk management frameworks to identify, measure, and manage various risks they face.