In 1988, the Basel committee introduced a new framework that is often referred to as the Basel Capital Accord. The 1988 Accord set minimum risk-based capital requirements (8 per cent) for internationally active banks. Since 1988, this framework has been progressively introduced not only in member countries but also in nearly all other countries with active international banks.

However, the significant transformation of the business of banking, financial markets, risk management practices and supervisory approaches that had taken place since 1988 motivated the committee''s plans to revise the 1988 Accord.

In 1999, the committee issued a proposal for a ''new capital adequacy framework'' to replace the 1988 accord. A consultative document was issued in January 2001, focusing on the "three pillars" of minimum capital requirements; a supervisory review process; and market discipline. The new accord (Basel-11), once finalised, will replace the current 1988 Basel accord (Basel-1).