Basel II is the second of the Basel Accords which were put in place by the Basel Committee on Banking Supervision in 2004 in an effort to mitigate banking and economic risk. Effective in 2004, Basel II expanded on Basel I and established three pillars:
- Pillar 1: Minimum Capital Requirements
- Pillar 2: Regulatory Supervision
- Pillar 3: Market Discipline
The minimum capital requirement imposed by Basel II was its greatest contribution to the Basel accords, ensuring that banks had to maintain minimum capital ratios of regulatory capital over risk-weighted assets. Basel II has now been superseded by Basel III.