Capital requirements imposed on banks relate to their balance sheets by requiring them to hold a minimum level of reserves proportionate to deposits and risk-weighted assets. An international standard like the Basel Accords is necessary because it establishes uniform capital standards that strengthen the global banking system and protect depositors by promoting financial stability worldwide through common banking regulations agreed upon by national central banks.

1. Describe in your own words the purpose of imposing capital re-
quirements on banks, how they relate to the bank's balance sheet,
and why there may be a need for an international standard such as
those set be the Basel Accords.
Solution
all the banks have to maintain reserves with central banks, the level of reserves will be decided
by concern central banks. the only reason is to protect depositors and investors and strengthen
the banking system world wide with uniformity.
the reserves will paid based on the deposit levels and the reserves shows in assets side of the
bank balance sheets. and the banks will get a minimum interest rate from central banks with the
name of REVERSE REPO.
BIS fosters co-operation among central banks with a common goal of financial stability and
common standards of banking regulations. Currently there are 27 member nations in the
committee. Basel guidelines refer to broad supervisory standards formulated by this group of
central banks- called the Basel Committee on Banking Supervision (BCBS). The set of
agreement by the BCBS, which mainly focuses on risks to banks and the financial system are
called Basel accord