Basel I

Basel I is an international banking regulation introduced in 1988 to ensure banks maintain enough capital to cover their risks. It set a minimum capital requirement, meaning banks must hold a certain amount of financial cushion (called capital adequacy) relative to their assets and risks. This helps prevent banks from taking on too much risky lending, reducing the likelihood of financial instability. Basel I focused mainly on credit risk, applying standardized risk weights to different types of loans to assess the required capital. Its goal was to promote a safer global banking system by encouraging prudent financial practices.