Incentive Mechanism And Trigger Mechanism About New Basel Capital Accord

New Basel Capital Accord (Basel II) was published by Basel Committee on 26 June, 2004. The New Basel Capital Accord succeeded on some merits of bank capital supervision in old Basel Capital Accord (Basel 1) in 1988. It lays emphasis on Minimum Capital Requirements, credit risk control and national risk supervision as Basel I. However, Basel II proposed a more rational approach to evaluate Capital Requirements by integrating Minimum Capital Requirements, extern supervision and market self-discipline, which only depends on Capital Requirements in Basel I. Compared with Basel I, some new evaluation and approaches presented in Basel II can more appropriately meet requirements of current finance market. This article concerning with trigger mechanism and incentive mechanism about New Basel Capital Accord and the relationship of these two mechanisms is very useful for the construction of Chinese banking regulation system.