Basel I

Basel I was the first set of international banking standards set out in 1988 by what was to become the Basel Commission on Banking Supervision. It set a minimum level of bank capital at 8% of risk-weighted assets; created a methodology for defining risk categories for bank assets and weighting them for capital measurement; and established risk-weighting layers to enable banks to measure capital against the 8% requirement. Government debt had a risk-adjusted weighting of 0% (i.e. no capital backing); assets such as secured mortgages were set at 50% while corporate loans required 100%. It also defined what sort of capital qualified in order to meet the 8% minimum: at least half should be equity; the rest could be made up of subordinated debt.