Implementing Basle II in Romanian Banking System

Abstract

One of the most important changes of every country's adherence to the European Union is the implementation of the Basle II Accord, whose main aim is to preserve the integrity of capital in banks and, by this, the protection of the depositors. Even if it is more complex than the first one, the architecture of Basle II Accord, in fact, as we will see, is quite simple. It is constructed on three reinforcing pillars, which provide a kind of triple protection, by covering three complementary approaches that work together towards ensuring the capital adequacy of credit institutions. Taken individually, the approaches of each pillar have their merits, but they are even more powerful when they are working together within a common framework. What is the strategy of Central bank for implementing Basle II in Romania, what would be the estimated effects of its implementation, pointing out all the advantages and disadvantages, as well as post-adherence Romania's objectives in banking system are the main aspects that are going to be described in this paper.