Food Recipes

bread Ingredients 1 packet (2 1/4 tsps) active dry yeast 1 cup warm water (110 – 120 degrees) 2 Tbsp. milk, room temperature 1 Tbsp. dark brown sugar 3 Tbsps. melted butter, room temperature 1 tsp. coarse salt 3 cups bread flour (spooned and leveled) 4 quarts of water 1/2 cup baking soda Coarse salt to taste 2 Tbsps. melted butter Directions †¢In the bowl of a stand mixer or in a large bowl, combine the yeast, water, milk, brown sugar, and butter. Let the mixture rest for 10 minutes so the yeast come alive. †¢Mix in the coarse salt, then the flour, one cup at a time. The dough will be tacky. Spray a large bowl with cooking spray or coat with oil. Transfer the dough to the bowl, flip to coat on both sides, and cover with plastic wrap for 30 minutes. †¢After 30 minutes, knead the dough for 10 minutes until it is smooth and elastic. Return the dough to the bowl, flip to cover both sides, and re-cover for an hour, or until roughly doubled in size. †¢Preheat the oven to 400 degrees and bring 4 quarts (16 cups) of water to a boil. Gently deflate the dough and cut in half using a sharp knife or bench scraper. Shape each half into a round loaf. †¢Slowly add the 1/2 cup of baking soda to the boiling water (it will bubble).Place one piece of dough onto a large slotted spoon and gently lower into the boiling water. Use the spoon to flip the dough in the boiling water for around 20 seconds, then lift the dough out of the water with the slotted spoon – allow the excess water to drip back into the pot. †¢Set the dough onto a greased baking sheet. Repeat the water bath with the remaining dough. Sprinkle both rounds with coarse salt, then slash an X on the top of each with a sharp knife so the bread can expand while it bakes. †¢Bake for 20-25 minutes, rotating the sheet halfway through. †¢Remove from the oven and brush with melted butter.

The Fundamentals of Entrepreneurship DB

My view of entrepreneurship is that you don’t need to have exceptional skills to be successful when you decide to start a business. All one needs to have is the desire to work in order to achieve his goals. According to my understanding of the word entrepreneur, it is a French word which means to undertake, so in business it is to start a business. To say that you must have superior qualities that a few have in order to be an entrepreneur is not only far fetched but also erroneous, I simply don’t agree with that kind of thought. Strategic planning is a direction or strategy that a business is going to follow in certain period of time. It is so important to a small business in because it keeps it on the edge of competition with big companies. A business with no strategy has no direction. Strategy outlines the direction of the business. Without a strategy it is difficult to achieve goals in a business and small businesses therefore ought to formulate viable strategies that can cope with competition and at the same time make the business focused in scope. To me strategic planning is a process that does not only requires good management skills but also it requires the will and commitment by all persons involved in order to attain the set goals. (McDonald, 2001) There are several factors that an entrepreneur should consider before choosing any form of ownership. There are: The risks involved which are normally high in entrepreneurship, purpose of the business, its goals, strategies for achieving each goal, a plan to implement each goal and the way of monitoring the implementation plan. Other   factors includes the influence one have in the running of the   business and one must also know the responsibility for debts, the amount of   tax payable to the government and the county or the local government, one must also know the   government policies of that particular business. A person must also consider the amount of profit to expect and the time he or she spends on that business. I disagree with educators who thinks that student in colleges should not engage in business, this is simply because the students engage in this for they have been taught its fundamentals and they cannot wait to put them in practice. Once students get the desired knowledge they become innovative and hence they cannot wait to test their skills as entrepreneurs. Research indicates that entrepreneurship should include innovations such as; new products, new production methods, new markets and new types of business among other innovations. In my own perspective wealth is created when such innovations are utilized since it results in new demand of commodities. The purpose of an entrepreneur is to build a lucrative, moral, and a sustainable business organization. I am of the opinion that one must adhere to factors such as: 1. Profitable business practices that satisfies and attract new customers, pay employees fairly and rewards innovation and diligence.2.Ethical business practices that include the protection the privacy of the clients and employee financial and personal information, to respect ethnic, political and religious backgrounds of the customers.3.Sustainable business practices that can withstand the dynamics of the world, these involves establishing markets not exploiting them, doing away with abusive working conditions and keeping   basic labor rights, replacing non-renewable energy sources with renewable energy sources, encouraging developing countries to improve labor and environmental standards amongst suppliers. (Cullen and Boteeah, 2005) Reference Cullen, J. and Boteeah, K. (2005) Multinational Management: A strategic Approach: 3rd Edition: Thomson South-Western; Mason McDonald, M. (2001): Marketing Plans: How to Prepare Them, How to Use Them. 4th Edition: London, Butterworth Heinenamm         

Introduction Essay Example | Topics and Well Written Essays - 2000 words

Introduction - Essay Example In this thesis, I use Saudization as a metaphor to highlight the impact of the Saudi culture and way of life on one immigrant community, namely the Iraqi migrants in Saudi Arabia. Further explanation for this definition will be provided in the following sections of this introduction. Moving from one social environment to another has an impact of changing the living pattern of emigrants in various aspects of their lives. This thesis will investigate and discuss the actuality of the Saudization of those families. The research will focus on the group of conservative Iraqi families who emigrated in late 1960s from Iraq to Saudi Arabia for socio-economical and political reasons. Whereas the notion of conservativeness has different meaning in both countries a comparison of the two concepts will be provided in the coming chapters. What these conservative Iraqi families faced while they were settling and how they managed to make their place in the society is what the research will be focusing on, concentrating on the social changes experienced as a result of moving into a more conservative Islamic state and highlighting the ability of these families to cope with the differing cultures whilst still trying to maintain their socio-cultural identity to enhance the feeling o f belonging within their children of the second generation. These families were considered to be a minority amongst the other foreigners living in Saudi Arabia. The reasons for immigration also vary from one family to another significantly and each has their own stories to tell. Underneath the coherent appearance of these small community members, the disruptive effect of cross-cultural consequences plays out behind the facade. However, this can be identified only by one of its members or a highly involved individual who has a direct link which allows them to reach within the circle of innermost thoughts and experiences and break the barriers of pride. In order to provide a

Dell Boy Computers Case Study Example | Topics and Well Written Essays - 2000 words

Dell Boy Computers - Case Study Example (Whitehead, 1997) Dell Boy Computers relies on its brand name, the promise of support and its massive market presence to balance higher costs. As Dell Boy Computer Company is selling into an increasingly sophisticated and price-sensitive marketplace, it needs to do forward integration to market its profitable high-end computer products. To fortify its profit generating objective, Dell Boy goes into real estate development by creating apt settings for human activity that are in harmony with the environment and providing distribution services for its suppliers and customers. The top management of Dell Boy is restructuring the organization around common capabilities to achieve better strategic focus. The Company will renew profits and growth by focusing resources and management attention on three key areas: a.)Increase the volume and value of the market share in computer products through forward integration consisting of special warehouse services and an excellent service delivery platform; b.) Expand profit and revenue growth in personal computers by promoting aggressive and consistent marketing and promotional activities; and c.) focus on new business in the existing demand from the educational segment and in the small business and home personal computers segment.The company needs to be more selective about its property purchase as location is an important consideration for this project. The company can construct a big commercial lease building which can house its distribution operations and it can also be rented out to other commercial tenants.Through forward integration, Dell Boy Company will achieve important cost synergies, eliminate redundant management layers, and decrease other ancillary operating expenses including discretionary spending, which are expected to result in annual cost savings for the company. As Dell Boy Computer Company integrates forward into real estate, warehousing and distribution, the company needs to understand the benefits, and the development process this development entails. Property development for computer companies requires a clear perspective of public administration, physical planning, municipal regulation, market research, legal system, site appraisal, economic evaluation and assessment, financial contracts, contractual and bidding procedures, building design, construction designs, and marketing strategy aspects. The crucial costs of time, quality, and asset value are seriously considered. (Ratcliffe, et. al., 2003) The other leading computer companies such as Red Fox USA and Toshiba had relied on indirect distribution channels such as various retail stores and large shopping malls while Apple Computers, markets its products directly to the end users. For instance, Kwantinetz stated that Compaq's traditional sales and distribution technique covers a total of 90-day period for building, transporting, inventorying and setting the cost value of its manufactured goods to its existing indirect distribution channels. This very long lead time has added a tremendous 6 percent to Compaq's cost of business operations. To enable

Korean American Media Essay Example | Topics and Well Written Essays - 750 words

Korean American Media - Essay Example That was the reaction that went viral when word spread about the making of K-Town in Los Angeles’ Korea town. Even the Korean American greybeards were afraid that this show would make them look bad.K Town’s executive producer, Mike Le, was amazed at how fast the rumor went before they produced anything. This excitement and media coverage illustrate the thrill felt by the world feels, as if they were not expecting such a show to be released. This gave the production crew the much-needed morale to provide quality production, as they enjoyed media coverage before the show’s release. Magazines like the New York Times, Los Angeles Times, and New York Post. Even SNL and Chelsea Lately covered the story of KTown’s release (Yang, 2012). Soon, Hollywood also got wind of this upcoming reality show, and two prestigious networks were battling over airing of the show. However, things did not work out from there on. This was until LOUD’s newly launched YouTube ch annel aired no holds barred online edition of KTown. The show was described as buzz worthy and high impact. From the cast and character development in K Town, it is evident that its production is aimed at challenging some of the existing stereotypes of Korean Americans. ... This leads to a series of vengeance, betrayal, and romance. This depiction contradicts the model minority stereotype. This is according to an article by Yang Jeff, ‘Tough Times for Tiger Mom as Asian America Meets Jersey Shore’ that was posted in Speakeasy on July 17, 2012.K Town portrays Korean Americans as partygoers, with theimmense preference to the nightlife of Korea town. In this show, both men and women party together and the men are portrayed asflirtatious and fighters.This is contrary to the known stereotype that Korean Americans are conservatives and with good morals. They do not publically display affection like kissing, and they are faithful, sticking to one partner. Furthermore, Korean American women have always been assumedconservative as opposed to outgoing. Their women do not indulge in public drinking, let alone with men. However, K Town’s Scarlet and Jowe both go out, and get seriously drunk after which Jowe starts flirting with other girls. Anot her stereotype is that Koreans mind about their perception and image they portray to the world. Because of this, the show was met by some criticism since the Korean community was afraid of negative depiction of their culture to the world (Wang, 2012). And indeed, the show portrayed the side of Korea’ nightlife that they are not comfortable with exposing to the world. As such, K Town was described as an Asian version of America’s Jersey show. It should be noted that these criticisms do not imply that such occurrences do not happen in Korea. Far from it, they do happen but most Korean K Town critics object because of public exposure. This is according to another article titled ‘The Altered Reality of K

How effective was the persecution of the Christians for the Romans Essay

How effective was the persecution of the Christians for the Romans - Essay Example Christianity was not begun within the social spheres of the more prominent people of the time period. The beliefs were spread through the impoverished, the lesser citizenry of Rome, and through connecting to the needs of those who were suffering. Therefore, those who believed became a threat to those who were satisfied with the state of society. One of the ways in which to eradicate the belief, or so thought those of prominence within the Roman Empire, was to martyr believers. The problem with creating a martyr is that a rallying point is created. Thus, the martyrdom of Christians within the Roman Empire became an act that helped to promote the beliefs, rather than a way to eradicate them. Because of the persecution of the Christians by the Romans, the religion found power within the martyrdom of its people, thus giving it needed sympathy which allowed for the beliefs to be spread further. The Christians of the first centuries were the anti-establishment group that came up against a goliath of a political system that was defined by its ties to the ritualized worship of the Roman people to the pagan gods. Christians refused to participate, putting their own beliefs above Rome, thus becoming enemies of the state. An example of the persecution of Christians can be found through the experiences of Vibia Perpetua through the firsthand account of Tertullian. Through understanding the sympathy that is created through the terrible events of the persecution, the psychology of martyrdom can help to explain part of the way in which the plight of these early Christians helped to further the expansion of the religion. Christians: The Hippies of Rome Despite the desire to eradicate the Christians, this was not an action that originated because of an objection to that belief. Nero used the Christians as a scapegoat in order to find a plausible criminal element behind the fire in Rome, although Tacitus wrote that Nero had ordered the fire (Cairnes, 1996, p. 27). Tacitus (109 A .C.E.) stated that â€Å"Therefore to stop the rumor, he falsely charged with guilt, and punished with the most fearful tortures, the persons commonly called Christians† (p, 286). Christians were used, according to the belief of Tacitus, which suggests was the common belief of the time period, as a scapegoat in order to alleviate political pressures. The first emperor of Rome to begin widespread persecution of Christians was Domitian (81AD to 95AD), the last emperor of the Flavian Dynasty. Belief was not an issue with the Romans, but the refusal to honor the emperor through sacrifice and to confer to him proclaimed divinity provided a fuel with which to separate the empire from the Christian sect and to begin retribution for this insult (Peters, 2005, p. 246). However, the close association with the Jewish community in Rome did not help the Christian cause. The Jewish community, during Domitian’s time, had refused to pay a tax that was to support the Capitolinus Jupite r. The Christians were the easier target to punish, although why it was effective as punitive to the Jewish community is unclear. One of the most potent uses of the Christian ‘plague’ in Rome was to focus on their participation in the economic difficulties of the age. One of the examples that can be appreciated is that the lucrative idol making business was harmed by the lack of

Buddhism Annotated Bibliography Example | Topics and Well Written Essays - 500 words

Buddhism - Annotated Bibliography Example In addition, Buddha’s do not believe that in life there is something like fate and urges that human beings are the drivers of their own lives whereby, every human being has the capacity and ability to liberate themselves from any suffering that one might be going through. The nature of self entails the act of awareness or having some consciousness. However, the nature of the self is not specific to awareness of any kind but it tends to be very general. The nature of the self may involve certain things such: feelings, imagination, intuition, memory, thoughts to mention just but a few. This means that the preposition of awareness may not properly define the content of the nature of the self because awareness tends to have some limitation. In addition, the nature of the self is not limited to anything just the same way that human being have unlimited desire in life. For example, human being are never satisfied with what they have, they always want to work hard to earn more money to meet their unlimited desires, in the same way that the nature of the self is not limited to consciousness or awareness as discussed. The main aim of self is the realization of individual personal identity. The Sri Raman asserted that the nature of self entails a fabrication o f mind whereby, self awareness may involve realization of oneself . Philosophers Aristotle and Plato tried to substantiate whether the soul, minds and the body are separable from each other and whether the soul is immortal upon human death. Whereby, Aristotle assertions supported the eastern religion of Buddhism that the nature of the self as an activity and that self exist within human being but it is separable from the human body. Aristotle added that self when a person dies, both the body and the self perish. He further substantiated his assertion using a knife as an example. The knife was considered as the body that has a soul whereby,

Wu zholiu's orphan of asia and taiwanese students studying in japan Essay - 1

Wu zholiu's orphan of asia and taiwanese students studying in japan - Essay Example ndaries of history and literature and through a discussion of comparison between Taiwanese and Japanese literature try to understand the effect that history has on literature. Orphan of Asia was written by a writer facing the crisis of identity that was just as common to any other Taiwanese. The book was written during 1943, two years before Taiwan attained independence. The book belongs to the period when Taiwan was a colonized country, and it generates just as much empathy for Taiwan as a literary work describing Hiroshima and Nagasaki event would generate. Belonging to a period when Taiwan, Japan, and China indicate much more openness in their relationships, the literary work forces its readers to think about human nature and their unending quest to gain power. The literary works also lay before us the option of choosing a peaceful and non-discriminatory path in contrast to the one that leads to capturing power (or rather power capturing us). The work also indicates how different people can be within their own country. Some people prefer to remain loyal to the serving master and thus gain their master’s ‘blessings’ while other prefe r to do what’s right which often goes against the way of the master. However, the only thing binding the people is their nationality in the same way that the thread binding Westerners and Easterners is ‘being human’. Wu Zhouliu was born in 1900 and after completing his education in a kÃ… gakkÃ…  (public school), he went to Taipei Teachers College. Later he joined a kÃ… gakkÃ…  as a teacher but left the job because of discrimination against Taiwanese. He went to China and became a reporter for a newspaper, he was afraid to come back to Taiwan as the Japanese officials suspected him. However, during the Pacific wars he had to return to Taiwan, as he feared Chinese wrath. He was not able to live peacefully as long as Japan continued its colonization. He died in 1976, because of a serious cold condition, at the age

Human Resource Management Essay Example | Topics and Well Written Essays - 2750 words - 10

Human Resource Management - Essay Example In this respect, the company has contracted Valmax consultancy to conduct training needs assessment and subsequent training for the employees of Coca-Cola Company. In addition, the Coca-Cola Company offers training and development courses for its associates through the Coca-Cola University (CCU) that engages the associates in e-learning and classroom learning. Although the Coca-Cola Company has done well in training its employees, it needs to focus on the personal component of the training program and offer equal training opportunities for its staff across the globe. The Coca-Cola Company is the global leader in beverage production, distribution, and sale, with presence in virtually all countries in the world. Presently, the company produces over 500 brands of soft drinks and other beverages with the main ones being Diet Coke, Fanta, Coca-Cola Zero, Sprite, and Dasani. The company boasts as the leader in the production and distribution of sparkling beverages, juice drinks, and ready-to-drink coffees. Owing to the popularity and huge market share of the Coca-Cola Company, it has a distribution system that covers more than 200 countries. In addition, The Company employs hundreds of thousands of employees at various levels. Since the Coca-Cola Company does close to 2 billion servings of beverages on a daily basis, it requires well-trained and motivated employees who will deliver good results even when the market experiences a slump. With over 700,000 employees worldwide, the Coca-Cola Company commands a huge workforce that requires prudent human re source management through constant training and development of employees (Kurtz & Boone 2011, pp. 281). In order to enhance the performance of the company and make it retain the competitive edge that it has, the Human Resource Department at the Coca-Cola Company extends education to all its associates at various levels. The development and educational programs that the company offers ensures the realization of full

Business Plan Degree Assignment Example | Topics and Well Written Essays - 3000 words

Business Plan Degree - Assignment Example Mission Statement of the Business Plan: First and foremost I would like to state the Mission Statement of our Business Plan. The Mission Statement of Thame Valley Golf Club should be to make it a professional Golf Club, making it a profitable one utilizing all its facilities to the maximum capacity. Thame valley golf club is situated in Oxfordshire, approximately 4 miles north of Thame Town centre. It consists of a par 36 full-length 9-hole course. The course is situated 10 miles north east of the city of oxford and 4 miles north of Thame town centre, Alysbury is about 10 miles away and High Wycombe is around 2 miles to the southeast. Motorway access is reasonably good as the M40 is only 5 miles away and M4 is around 25 miles away. The course is currently of 9 holes but land is available to build a further 9 holes in the future. There is only one set of Tees for the course. There is a practice putting green adjacent to the clubhouse and a large teaching and practice area. No PGA professional has been in place. Hence lessons have not been promoted. A local PGA Pro is running on ad hoc basis. The arrangement with the local PGA Pro is terminated with a mutually agreed settlement. At present a small shop selling regular day-to-day items and accessories is run by the owner's daughter. A new shop will be established near the test tee, where there exists an outbuilding, which will be made secured now. The Pro has to make the interiors of the shop. Facilities available: Male Female changing and shower rooms. Administrative offices Cafeteria style eating area Golf shop Current shop membership, Membership and Green Fees. The membership is growing steadily. Currently the membership stands at 419 comprising 196 men, 22 women, 99 seniors (Male), 19 seniors (Female) and 11 juniors. The owner targets to increase the membership to 700 with Men Ladies and juniors as main target group. The cost of the membership is as follows: Entrance Fee 175 Adult yearly subscription 385 Senior Yearly subscription 225 Junior 85 Social 15 Visitor 9 midweek ,, 12 a weekends ,, With members 8 The no. of round played by visitors averages at 35 and that of 30 rounds by members. Target round for visitors doubled at 50 rounds. External: Surroundings: There are 8 primary schools, 2 secondary comprehensives, several colleges and Oxford University in the surrounding. There are also two leisure centres and 3 private health clubs within 10 miles surroundings. Until recently there were 2 golf shops but due to fierce competition one of them has shut down. Competition: There are two more golf clubs in the surroundings: 1. The Old Established Private Members Club There is the St. Annes club, which is a private club situates around 9 miles from Aylasbury. It is a 103 years old club. This as professionally designed reputed golf club. It has a small practice area used by the professional for teaching. There is a small shop but is not well stocked.

Energy drinks Essay Example for Free

Energy drinks Essay Energy drinks are beverages that can be used to supplement energy and concentration. It contains several ingredients, some good others bad. They contain ingredients such as caffeine, guarana, taurine and many more. Usually they are beneficial, but when taken in large amounts; some ingredients can cause unwelcome side effects. Many people consume energy drinks for enjoyment and the extra kick of energy for the day, but they are not aware of the hidden ingredients that can cause illness. In my opinion I believe that energy drinks are dangerous because they can cause illness, children and teenagers will be affected by the drink and the horrible side effects. The packaging of energy drink might convince you that it is are fine to drink but most of us are unaware of the hidden dangers. Those dangers can put anyone at risk of illness. Energy drinks contain high amounts of sugar similar to soft drink but energy drinks also contain high amounts of caffeine and taurine. Taurine is an amino acid that your body naturally produces. It helps regulate heartbeat, muscle contractions, and energy levels. But when there is too much taurine in our bodies, it can make some body parts overactive, like platelets. Platelets are found in the blood stream and they are very important to the body. They help to clot blood when there is a cut. The sugar makes the platelets overactive which makes them stick together and cause blood clots. This increase risk of heart related disease. In the US a small was conducted, they found that there is a link between the consumption of energy drinks and heart disease or high blood pressure. The researchers found healthy adults who drank two cans of a popular energy drink a day had above normal blood pressure and heart rate. Not only does it affect us both physical and mentally, it can affect children and teens who consume energy drinks. Children and teenagers don’t know what they are consuming and the affect it has on the body. You may see children or teens consuming energy drinks at sporting events instead of sport drinks, to boost energy levels. We may think that energy drinks and sports drinks are the same, but they’re not. Sport drinks provide only carbohydrate and salts to replace those lost in sweat, whilst energy drinks give temporary boost of energy. This may not sound bad but it will affect them over the long term. Like a child suffering with diabetes should not continue drinking energy drinks because the sugars in them can cause an imbalance of insulin. Even the Daily Telegraph thinks that energy drinks are unsafe because it can link to severe illness. The Daily Telegraph has reported â€Å"Energy drinks could be dangerous for children and teenagers,† The newspaper said that the use of high-caffeine drinks has been linked to â€Å"seizures, mania, stroke and sudden death†. Energy drinks can effect children and teenagers and also give people terrible side effects. Some people are not aware that energy drinks can give awful side effects after consumption. There are many side effects that can occur after drinking like vomiting, nausea, and hallucinations. Many ingredients inside energy drinks cause some people allergy reactions. There are many effects that can make people gain weight like people who don’t exercise. The mayo clinic says â€Å"that sugar intake has a direct correlation with weight gain, especially for people who don’t exercise. † But it can get worse, if energy drinks are drank with alcohol, it can make you pass out or get seriously hurt. Energy can drinks can make people sick from the dreadful side effects. However energy drinks create enjoyment among people, it has good taste and contains some good vitamins and herbs like vitamin B, ginseng, ginkgo Biloba and Antioxidants which are good for the body. To finish like to say that we should reconsider drinking energy because they can cause illness, young people will be affected and they can give people terrible side effects.

The Unexamined Life Is Not Worth Living Socrates Philosophy Essay

The Unexamined Life Is Not Worth Living Socrates Philosophy Essay The unexamined life is not worth living. With these words, Socrates stated the creed of reflective men and women and set the task for ethics: to seek, with the help of reason, a consistent and defensible approach to life and its moral dilemmas (Walters 22). Ethical inquiry is important to us when we are unsure of the direction in which we are heading. New philosophy calls all in doubt, wrote John Donne in the wake of the Copernican Revolution and of Charles Is violent death, suggesting that new thoughts had challenged old practices (Donne). Today, new practices in the biomedical sciences are challenging old thoughts: New medicine calls all in doubt (Walters 22). Few moral convictions are more deeply ingrained than that of the sanctity of life. If plausible once, however, the view that life is a sacred process (initiated, sustained, and finally halted by God) is now more difficult to maintain (Baier 1-4). Recent advances in the biomedical sciences allow us to intervene in, and sometimes take control of, the processes of life and death. Not only can death, quite often, be kept waiting by the bed or machine, doctors and scientists can now also intervene in, indeed, initiate the process of life: cloning and recombination of DNA are two examples; in vitro fertilization (IVF) is another (Walters 23). It is not surprising, then, that in the wake of these revolutionary developments, bioethics is flourishing. Despite the obvious enthusiasm of philosophers to take a stand on many complex moral issues in the biomedical sciences, however, a curious skepticism pervades the enterprise (Walters 23). Take the comments by a dean of an Australian Medical School on the teaching of medical ethics: Like any other lifelong clinical teacher I have firm views about such topics as euthanasia, continuing severe pain, acceptable and unacceptable risks of various treatments, the appropriate use of life support systems and numerous other matters of this sort which I discuss with my colleagues, assistants, and students but would not wish to teach dogmatically since much depends on the religious and ethical views which they may have and which also must command my respect (Medical Ethics). The paragraph suggests that although ethics is not a matter of dogmatism, it is a matter of personal preference or choice, something one cannot-or should not-argue about. Then there is another attitude, implied in a newspaper article by B.A. Santamaria, that ethical inquiry is useless unless those investigating bioethical issues have been à ¢Ã¢â€š ¬Ã‚ ¦endowed with authority by Almighty God [or] the Prime Ministerà ¢Ã¢â€š ¬Ã‚ ¦ (Santamaria). Since the study of ethics is all about what is right and what is wrong, it is not possible to come to a correct conclusion unless one is directly appointed by God to make this conclusion. God is the only One who can correctly decree what is ethical and unethical; we as imperfect humans should not even attempt to do this job. IVF raises many of these difficult moral issues. If the above conceptions about the nature of ethics were correct, however, discussion of these issues would either be futile (because morality is a matter of personal choice or opinion) or superfluous (because morality is what a divine or secular authority says it is) (Walters 23). In this paper, I want to suggest that it is not only possible, but also necessary to inquire into the ethics of such practices as IVF because the fact that we can do something does not mean that we ought to do it. To begin with, I will provide the basic medical facts involving IVF to give a solid understanding of what goes into the whole process and what facts involving this process cause the questioning of the ethical and moral issues. Infertility affects about 4.9 million couples in the United States, or one in every twelve. Approximately one-third of infertility cases can be traced to causes in the female (Encarta). However, a small proportion of infertile women can produce healthy eggs but, although they have a normal uterus, they have damaged or diseased fallopian tubes which prevent the egg from passing from the ovary to the uterus (Warnock 29). Aside from conventional methods of fertility treatment, there are also several newer techniques, collectively known as assisted reproductive technology (ART). The best known of these is in vitro fertilization (IVF) (Encarta). The concept of IVF is simple. A ripe human egg is extracted from the ovary, shortly before it would have been released naturally. The egg is then mixed with the semen of the husband or partner so that fertilization can occur. The fertilized egg, once it has started to divide, is then transferred back to the mothers uterus. It is common practice to transfer more than one embryo to a potential mother whenever possible because of the normal hazards that come along with pregnancy, such as the egg not attaching to the wall of the uterus (Warnock 29-30). As many ripe eggs as are accessible are harvested. Each egg is then mixed with semen to achieve fertilization. Assuming there is no abnormality in the semen, the success rate of fertilization is usually at least 75%. When the time comes to transfer the embryos to the woman, it may be that only one embryo is suitable for transfer, or there may be several. The reason for transferring more then one embryo is that this should give the woman a better chance of achieving a pregnancy (Warnock 30). Nearly 0.2% of American and 1% of British babies are being born after IVF. There are now more than 300,000 IVF babies worldwide. Patients stand in line for treatment, regardless of the stress, discomfort, and risks, and despite the fact that the success rate for the treatment is seldom better than 1 in 5 or 20% (Gosden 26-27). This surprisingly high number of IVF babies, and the many more IVF attempts that do not produce babies, which are currently being produced around the world present a need for the discussion of the ethical, or unethical-ness of in vitro fertilization. To call an infant born as the result of IVF a created individual is to imply that there is some difference between a child conceived and brought to term in this way and one conceived in the womb and carried through completely to term by the mother. To many religious people, the work of creation belongs, in the first place, to God, as it is outlined in the creation stories of the book of Genesis. God is the one who creates life and order out of chaos. Mankind is the highest product of creation, made from materials, which are part of creation. To man, who is made in the image of God, there is given dominion over the created world and the authority to exercise a stewardship which involves caring for what has been created. This has been developed within the Christian tradition so that man may be considered a partner with God in the continuing work of creation (Walters 88). In examining the question of IVF we are not looking at a question of creation out of nothing, but rather what may be seen, from the religious viewpoint, as an aspect of the trust given to mankind to care for creation. It may then be more appropriate to think of the facilitated rather then the created individual when we consider human intervention in the process of human fertilization (Walters 88). In considering this question and its ramification we will look at the viewpoints of some writers, both within and outside the Judeo-Christian ethical tradition, and try to determine whether or not basic notions of humanity are threatened by the artificiality which some have claimed is involved in the process. One argument against IVF is presented by the Roman Catholic Church using natural law as the basis for their argument. The theory of natural law is widely taken to mean that God has visibly set forth Gods laws in nature and humans should obey them (Dyson 52). The primary feature of IVF that comes under scrutiny from natural law is undoubtedly concerned with IVF as external fertilization. This is to say, the primary accusation coming from natural law focuses on the fact that in IVF, fertilization occurs in vitro in a glass dish, rather than in vivo, namely in the womans body. A second feature of IVF that is challenged by natural law is the use of masturbation by the husband or donor to provide the sperm without which the external fertilization cannot go ahead (Dyson 53). A rebuttal against this is presented by Fletcher, in which he has proposed a personal instead of a biological interpretation [of the natural law theory], so that the nature to be respected becomes not the reproductive process but what is worthy of a human being-freedom, planning, control of physical nature to serve human nature! à ¢Ã¢â€š ¬Ã‚ ¦Mans vocation is actually to frustrate nature as do medicine and technology, if rational needs and purposes require it (Fletcher 323). Another argument that many use to defend IVF, and also abortion, is that the embryo is not actually a human being but instead just a mass of cells with the potential to become a child, therefore not worthy of respect or careful treatment as that which would be awarded to a baby. Walters, however, argues that the embryo is actually living: it metabolizes, respires, responds to changes in the environment, grows, and divides (Kass 32-60). It is actually human; it pertains to the species homo sapiens. It is inappropriate, therefore, to refer to it as potential human life. We could, however, say it is potentially a mature human being (Walters 51). Walters continues this argument using the reasoning of Paul Ramsey. The human individual comes into existence first as a minute informational speckà ¢Ã¢â€š ¬Ã‚ ¦ (with the single exception of identical [multiple births]) no one else in the entire history of the human race has ever had or will ever have exactly the same genotype. Thus, it can be said that the individual is whoever he is going to become from the moment of impregnation. Thereafter, his subsequent development may be ascribed as a process of becoming the one he already is. However, some would counter-argue that, since twinning and recombination are possible in the early days after fertilization, irreversible individuality had not been achieved at this stage. These possibilities show the uncertainty of human individuation at conception. If the uncertainty remains as long as twinning is possible, it would seem that individuality could be certainly established only at blastocyst (an embryo four to six days after fertilization). Before this period, the embryo may be considered as only potentially a human being. This would imply that it is worthy of respect but not the same degree of respect as accorded to a mature human being (Walters 53). There are many more arguments concerning the ethicalness of in vitro fertilization, but the discussions stated above are the main points stated by the opposing sides. I do not believe one single conclusion can ever be drawn from these arguments. One can form him or her own personal opinion, but there will never be a single right or wrong answer. Based on the arguments I have read and learned about while writing this paper, I have drawn my own conclusions regarding the ethicalness of in vitro fertilization. I believe an embryo is a human being from the moment of conception and therefore its life should be treated with as much respect as a born baby should. I believe this life is precious and a creation of God. A baby is also, or should be, the representation of two people coming together in love to create a life. It should not be done outside of the body. An argument presented in Walters book that defends this position states: Those who reject human interference at the beginning of life would most certainly do so on the basis that what nature has decreed cannot take place ought not to take place. For an infertile couple, this implies that they must remain infertile: if they cannot produce a child by the normal means of conception then they must remain childlessà ¢Ã¢â€š ¬Ã‚ ¦(89) This is not necessarily the case and is a very narrow-minded conclusion to draw, as I will explain in the next paragraph. I sympathize with the couples who wish to have a child that shares their genetics, but I believe God made the couple infertile for a specific reason. He made them infertile so they could have the opportunity to give an orphaned or abandoned child a home. There are thousands, maybe even millions, of children without families all over the world. These children deserve love and a home just as much as the couple deserves to have a child. As William Walters put it so clearly, instead of insisting on the right of a couple to have a child, as some have done, let us be mindful rather of the right of a child to have parents (Walters 78). Just because a couple cannot produce their own genetic child does not mean that they must remain childless. While many people may not agree with other conclusions I have drawn regarding the personhood of the embryo or the immorality of a couple having a child outside of intimacy, there is no disputing the fact that infertile couples have an alternative to having a child created through science. They could make something good out of a seemingly bad thing by giving a child without a family a home, love, and a life. There is an alternative to infertility without relying on scientists, test tubes, and small chances. They can create their own miracle by giving life to an already-born deserving child. Baier, K. The Sanctity of Life, Journal of Social Philosophy. Vol. 5. April 1974: 1-4. Donne, John. The First Anniversary. Dyson, Anthony O. The Ethics of IVF. Mowbrey: 1995. Fletcher, J. Anglican Theology and the Ethics of Natural Law, Christian Social Ethics in a Changing World: An Ecumenical Theological Inquiry. Association Press: New York, 1966. Flynn, Eileen P. Human Fertilization In Vitro: A Catholic Moral Perspective. University Press of America: 1984. Gosden, Roger. Designing Babies. W.H. Freeman and Co.: New York, 1999. Kass, L.R. Making Babies Revisited, The Public Interest. Vol. 54. 1979: 32-60. Infertility. Encarta 1998. CD-ROM. Microsoft Corporation, 1993-1997. Medical Ethics. Editorial. The Medical Journal of Australia 11 June 1977: p. 871. ODonovon, Oliver. Begotten or Made? Clarendon Press: 1984. Ramsey, Paul in Rachels, J. ed. Moral Problems. Harper Row: New York, 1975. Santamaria, B.A. Medics Play God With Babes on Ice. Perth Independent 26 May 1981. Walters, William and Peter Singer ed. Test-Tube Babies. Oxford: Oxford University Press, 1982. Warnock, Mary. A Question of Life. Oxford: Basil Blackwell, 1984.

Basel II Accord Effects on Qatar Banking

Basel II Accord Effects on Qatar Banking International banking is increasingly vital for every country in order to create an image for itself in the international finance market Chapter 1: Introduction International banking is increasingly vital for every country in order to create an image for itself in the international finance market. Alongside, the increase in globalisation and the upsurge in outsourcing by multinational companies in the west have created a lot of opportunities for growth in the Middle East and Far Eastern countries. This apparently requires a strong internationally stable financial organization to conduct transactions across the globe without any errors (i.e.) 100% accuracy.   This includes reliability and stability of the bank under extreme situations (like emergency for example), which is highly important to conduct international transactions. Also the potential to meet financial demands during crisis situations is a vital criterion that is considered while presenting themselves in the international market. In addition to the globalisation, outsourcing and export/import growth, there is also a tremendous growth in cross-border finance among the countries in the Middle East and Far East. Along with all these factors the developing nations in the Middle East face a mandatory requirement of a sable international banking system in order to attract foreign investment. The increase in cross border finance activity among the middle eastern countries is also a critical element to be considered for establishing a stable international bank within the nation in order to represent the country in the international finance market. The countries in the Middle East are actively participating in cross-border finance since the dawn of the 21st century. Being a producer of Oil which is a vital ingredient at all levels of life right from day-to-day driving up to power generation for the nation in order to run industries and serve domestic purposes, makes it critical for the nations in the Middle East to have a strong international banking system to conduct transactions across the globe accurately and effectively. Qatar is a growing nation in the Middle East with primary operations in oil and gas export as well increasing its potential in areas of development in technology focusing on IT and communication. The nation has efficient international operations and con ducts financial transactions between western nations as well as with eastern nations. Since the take over of the government by H.H. Sheikh Hamad Bin Khalifa in 1995, the country is making tremendous progress in deploying its hydrocarbon resources in order to penetrate in the international market and present itself as a financially stable nation in the international market. Further to the increase in the international operations by the countries in the Middle East and the Far East, the Bank for International Settlements developed a framework to co-ordinate the international financial operations as well as create a portfolio for the capital measurement and capital standards which every nation involving in international banking operations is expected to adopt in order to stabilise and put in order the international transactions between countries. The Basel II accord produced by Basel Committee on Banking Supervision aims at achieving International Convergence of Capital Measurement and Capital Standards. The arrangement aims to set a minimum standard to be met by its participating nations in order to achieve capital adequacy by the participating nations in the international market. This report aims at analysing the effects of Basel II accord on Qatar’s banking sector. The objectives of this report are stated below: To analyse the Basel II accord and it’s framework for measuring capital adequacy in the nations participating in the international banking transaction. To investigate the banking sector of Qatar and the effect of Basel II accord on its international operations and capital adequacy. To analyse the effect of Basel II accord on the nation’s two major banks having international operations in Qatar namely, Qatar Industrial Development Bank (QIDB) and Commercial Bank of Qatar (CBQ) and to analyse the impact of Basel II Accord on the Banking Sector of Qatar. Report Outline: The report comprises of the following chapters. Chapter 1: Introduction This chapter introduces the reader to the objectives of the report and presents a broad picture of the report to the reader. Chapter 2: Overview of Basel II Accord This chapter presents with an overview of the Basel II accord. The three pillars of Basel II accord namely Minimum Capital Requirements, Supervisory Review Process and Market Discipline are analysed in detail to provide the reader with a detailed understanding of the consent of Basel Committee on Banking Supervision. Chapter 3: Implications and Critical Analysis of Basel II Accord The literature review on the Basel II Accord in chapter 2 is followed by the critical analysis and its implications on nations (business and political) are presented to the reader before proceeding to present the overview of the Qatar Banking sector.    Chapter 4: Overview of Qatar and its Banking Sector This chapter presents the reader with an overview of Qatar as a nation and its business operations in the International market. Alongside, the chapter analyses the country’s growth in the banking sector and its internationally active banks. Chapter 5: Case Study This chapter conducts a case study analysis on Qatar’s two internationally active banks namely Qatar Industrial Development Bank (QIDB) and Commercial Bank of Qatar (CBQ). The effect of Basel II accord on the banks along with an overview of the bank is presented to the reader. The data used to present the case study is primarily obtained from secondary sources like journals, reports and white papers. This is apparently due the fact that the analysis is conducted on a foreign nation as well as the data available from the secondary sources are also reliable as they are published by legitimate organizations and popular journals.   Chapter 6: Results and Discussions The results of the case study analysis and discussions are carried out in this chapter. This chapter aims to present a clearer picture to the reader on the effects of the Basel II accord on the banks analysed. Chapter 7:   Conclusion and Recommendations The conclusions derived from the case results and discussions on the case study and the overall conclusion on the effect of Basel I accord on the Qatar Banking Sector is presented in this chapter. Alongside, this chapter presents a few constructive recommendations based on the results and discussion on the case study. Chapter 2: Overview of Basel II Accord This chapter begins with an overview of the Bank for International Settlements followed by a detailed analysis of the Basel II accord. The Basel II committee is also analysed alongside in order to provide a deeper insight to the readers. 2.1 Bank for International Settlements Overview and it’s Operations The Bank for International Settlements (Bank for International Settlements) is an international organization looking after international monetary and financial co-operation across the globe. This organization acts as the bank for all the central banks of countries participating in the international finance and banking. The Bank for International Settlements profile states that the bank achieves the aforementioned statement through acting as A forum to promote discussion and facilitate decision-making processes among central banks and within the international financial and supervisory community. A centre for economic and monetary research A prime counter party for central banks in their financial transactions and Agent or trustee in connection with international financial operations. Established in 17th Many 1930, it is the oldest financial organization at the international level. The Bank for International Settlements has three major decision making bodies within the bank to achieve its mission. They are The general meeting of member central banks This meeting is held before the end of four months of the end of the banks annual financial year. The meeting addresses all the issues related to business and the member central banks gather to approve the annual financial statement released by the bank. The Board of Directors The board of directors comprise the central bank governors elected from various participating countries. They monitor the overall operation of the bank and take responsibility for actions to be taken and address issues related to disputes and other major international financial cross border problems. The Management Committee The management committee is the first line representative of the Bank for International Settlements and addresses the day-to-day activities of the bank. This committee primarily manages the monetary and financial co-operation services. The services include Meetings: Apart from the Annual general meeting the Bank for International Settlements organizes meetings on a bimonthly basis. This meeting brings the member central banks together with the aim of monitoring the global economic and financial development and discusses issues on its policies in relation to the monetary and financial stability. Committees and Secretariats Bank for International Settlements has several committees to monitor specific problems and issues in the international finance and cross border loans. Alongside, several other committees and organizations focusing on international financial systems have their secretariats in the Bank for International Settlements and work closely with the bank in order to enhance the overall international banking and cross border finance. Basel committee of the Bank for International Settlements is the committee that laid the specifications for capital measurement and capital standard of the central banks participating in the international banking. Research and Statistics: In order to support its meetings and the activities of the organization’s Basel based committees the Bank for International Settlements carries out regular research on economic, monetary, financial and legal areas of the international banking and cross border finance. Investment services for central banks: Bank for International Settlements also provides security, liquidity and return for its central bank members. The three primary points with respect to this identified by the organization are: To provide security, the Bank has built up a sizeable equity capital and ample reserves. It pursues an investment strategy focused on combining diversification benefits with intensive credit and market risk analysis. To ensure liquidity, the Bank stands ready to repurchase its tradable instruments at little cost to its customers and thus respond quickly and flexibly to their needs. The BIS offers an attractive and competitive return on the funds deposited by central banks and international organisations The Bank for International Settlements focuses on serving the financial needs of central banks of the member countries. Alongside, it also acts as a banker managing the funds for numerous international financial institutions. 2.2: Basel committee Overview The Basel committee was established the member central banks of the Bank for International Settlements in order to create a standard for the international banking and capital framework for crass border finance and lending. The committee was initially set up in 1970 and meets regularly four times a year to discuss the progress in international banking and address issues related to business in this context. The member nations of the committee include Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, United Kingdom and United States. The country’s central bank and financial institutions that are not active in banking commercially but monitor the financial operations of the nation both at national and international levels represent the nations. The committee does no possess any authority over its member nations banking systems and the decisions of the committee are never intended to have a legal force on its member nations. The Central bank governors of the Group ten countries endorse the committee’s major initiatives. Also the committee reports to the group ten countries central bank governors. The committee first proposed he capital measurement system in 1988 commonly referred to as ‘Basel Capital Accord’. The committee aims in supervising the international banking operations of the nations across the globe. The decisions of the committee endorsed by the group ten countries address various financial issues in the international market outside the groups as well. The major aim of the committee is the ‘close the gaps in international supervisory coverage’ and to ensure that no foreign banking systems escapes the supervision in order to establish a harmony among the member nations of the Bank for International Settlements as well as in the international market. The committee has promoted supervisory standards in the past few years. Some of its major milestones include the following 1997: Cover Principles for effective banking supervision 1999: Core Principles methodology The committee also presented the Basel II accord with revision on international capital framework. This aims to standardise the capital framework of every bank participating in the international banking as well as sets slabs for minimum capital holdings to be met by the banks in order to qualify for international operations. The committee has numerous subgroups to perform specific tasks of the committee in order to achieve the overall motto of the committee. They are listed below Accord Implementation Group Accounting Task Force Capital Group Capital Task Force Core Principles Liaison Group (with 16 non-G10 countries) Cross-Border Banking Group Electronic Banking Group Joint Forum (with IAIS and IOSCO) Joint IOSCO BCBS Working Group on Trading Book Research Task Force Risk Management Group Securitisation Group Transparency Group The next section provides a detailed analysis of the Basel II accord and its various implications on international banking is discussed in chapter 3. 2.3 The Basel II Accord The Basel II accord was released in June 2004 further to the release of the Basel Accord in 2003. The Basel II is a revised edition of the initial Basel capital accord. It is a framework designed to derive the capital holdings of internationally active banks to meet the international standards and sets a minimum level of capital holding which is a primary criteria for the banks. The Basel II framework is aimed to be applied on a consolidated basis over internationally active banks in order to preserve the integrity of capital in the banks with subsidiaries. Also the framework eliminates the double gearing through this approach. The Basel II accord’s framework is also applied on a fully consolidated basis on any parent holding company which acts as a parent entity within a banking group in order to capture the risk on a consolidated basis without missing any element that contributes considerably to the risk of the overall banking system. Alongside, the framework is also applicable to all internationally active banks at every tier of the banking group. Apart from the aforementioned statements one of the principal objectives of the Basel II Accord is to protect the interest of the depositors essentially to ensure that capital recognised capital adequacy measures is readily available for the depositors. Apparently, these measures are aimed to establish a common platform for international banking and cross border finance across the globe. The scope of application extends to the following segments of the international banking and finance entities. Banking, securities and other financial subsidiaries Significant minority investments in banking securities Insurance entities Significant investment in commercial entities. Deduction of investment pursuant to this part The aforementioned entities are obtained from the Basel Committee report on International Convergence of Capital Measurement and Capital Standards, published in June 2004. The Basel II accord overview is based on this report. The illustration in the fig 1 gives a clear picture of the overall scope of application of the Basel II accord. The Basel II accord is split into three pillars. The first Pillar: Minimum Capital Requirements The following subsections provide a detailed analysis on the elements shown in fig 2. 2.4: The First Pillar The First pillar lays down the minimum capital requirements that every internationally active bank should incorporate.   It is split into the following subsection. 2.4.1:   Calculation of Minimum capital requirements The minimum capital requirement is calculated as a measure of the capital ration. The capital ratio in turn is calculated using the regulatory capital and risk-weighted assets. The requirement of this criterion is that the capital ration must be a minimum of 8% or more in order to be eligible for the international activities. Also, in case of a two tier system the capital in tier 2 must not be greater than the tier 1 capital (i.e.) the tier 2 capital can be a maximum of 100% of the tier 1 capital. The capital is accounted from the following sources    Regulatory capital: The minimum accounting capital requirements for the financial institution encompasses the regulatory capital. The Basel II accord has withdrawn the provision to include general provisions in tire 2 capital, which was in effect in the 1988 Accord under the Internal Ratings-Based (IRB) approach.   Furthermore the accord has lain down that the banks using the Internal Ratings Based approach to their other assets mus t compare the amount of total eligible provision with the total expected losses amount to the bank. This eventually increases the capital holding of the bank in order to meet the criteria. Risk Weighted Assets: The Basel II Accord calculates the total risk-weighted assets by multiplying the capital requirement for market risk and operational risk by the reciprocal of the minimum capital ratio of 8% and adding the resulting value to the sum of risk weighted assets for credit risk. Even though this is subject to review the approach lays enormous burden on the bank to increase its minimum capital holdings. Apparently the Basel II Accord is aiming to establish that the internationally active banks must have enough capital to meet its short comings without depending on loans and cross border finance to address its immediate requirements and short comings. The idea though being novel is very intense for the banks to maintain the required minimum capital. 2.4.2: Credit Risk-The Standardised Approach Under this method the Basel committee provides the internationally active banks a choice for calculating their capital requirements for credit risk. The first approach is the standardised method of measuring the credit risk through support from external credit assessments. This method is approved by the Basel committee while the other method is yet to explicitly approved by the committee. Under the alternate method of calculating the credit risk, the bank supervisor can allow banks to use their internal rating systems for calculating the credit risk. Under both the methodologies one should not oversee the fact that the Basel committee is very keen in assessing the credit risk on the capital holdings of the internationally active banks. Even though this is appreciated, the rules are very stringent making it very difficult for the banks for adopt easily. 2.4.3 Credit Risk- Internal Ratings Based Approach The Basel II committee has given supervisory approval for banks to use the Internal Ratings-Based approach to determine their capital requirement for a given exposure subject to certain minimum conditions and disclosure requirements. The risk components considered include Measures of the probability of default (PD), Loss given default (LGD), The exposure at default (EAD), Effective maturity (M) The Basel II accord states that â€Å"The Internal Ratings Based Approach is based on the measure of unexpected loses (UL) and Expected Loses (EL). Under the Internal Ratings Based Approach, the committee expects the bank to categories their exposures in order to identify the different underlying risk characteristics. The categories include corporate, sovereign, bank, retail and equity. These are identified as the corporate asset classes and the approach further expects the bank to identify the subclasses associated with the asset classes in order to measure the credit risk associated with the exposure. The detailed analysis of every corporate class and its associated subclasses is beyond the scope of this report. In essence the Internal Ratings Based Approach gives the bank more liberty to calculate its credit-risk on the minimum capital requirement for a given exposure. But the producers laid by the Basel II Accord is very tedious to adopt and implement for every corporate class exposure and identifying the subclasses associated. 2.4.4: Credit Risk- Securitisation Framework The Basel Committee in its revised accord, has made it mandatory for the banks to apply the Securitisation Framework for determining regulatory capital requirements on exposure arising from traditional and synthetic Securitisation or similar structures that contain features common to both.   The Basel II accord also states that the capital treatment of the Securitisation exposure must be determined on the basis of the economic substance rather than the legal form of the structure. It is apparent that the securities can be structured in many different ways and the committee has approved the use of either the traditional Securitisation or the synthetic Securitisation framework. Also the Basel II accord expects the supervisor to look at the economic substance of transaction in order to determine whether it should be subject to Securitisation framework or not. This gives the discretionary power to the supervisor to decide on a specific transaction whether to include it in the framework or to eliminate it from the framework towards determining the regulatory capital framework. The traditional Securitisation and the synthetic Securitisation framework are discussed below. Traditional Securitisation: The Basel II Accord defines the traditional framework as â€Å"a structure where the cash flow from an underlying pool of exposures is used to service at least two different stratified risk positions or tranches reflecting different degrees of credit risk†. The advantage with this approach is that the payment to the investors is based on the performance of the specified underlying exposures rather than a derivation from an obligation of the entity originating those exposures. Synthetic Securitisation â€Å"A synthetic Securitisation is a structure with at least two different stratified risk positions or tranches that reflect different degrees of credit risk where credit risk of an underlying pool of exposures is transferred, in whole or in part, through the use of funded (e.g. credit-linked notes) or un-funded (e.g. credit default swaps) credit derivatives or guarantees that serve to hedge the credit risk of the portfolio†. This approach leaves the return to the investors in the hands of the performance of the underlying pool. Apparently, the risk associated is higher since the performance can be affected by numerous causes. From the above-mentioned approaches the Basel II accord’s stand for evaluating the capital and minimum capital requirements are evident. 2.4.5: Operational Risk The operational risk is defined by the Basel Committee as the risk associated with the loss resulting from inadequate or failed internal processes, people, systems or external events. This includes the legal risk with the exclusion of strategic and reputational risk. The Basel II Accord has approved three methods for calculating the operational risk and risk sensitivity with the implications on minimum capital requirements. They are: (i) The Basic indicator approach, (ii) the Standardised Approach and (iii) Advanced Measurement Approach. Basic Indicator Approach: In this case the banks should hold capital for the operational risk equal to the average over the past three years of a fixed percentage. This is expressed as a formula below KBIA = [ÃŽ £ (GI1†¦n x ÃŽ ±)] Where KBIA = the capital charge under the Basic Indicator Approach GI = annual gross income, where positive, over the previous three years n = number of the previous three years for which gross income is positive ÃŽ ± = 15%, which is set by the Committee, relating the industry wide level of required capital to the industry wide level of the indicator. This formula is obtained from the Basel II accord for the purpose of reader understanding. Standardised Approach: The standardised approach divides the bank’s activities into eight-business lines namely corporate finance, trading sales, retail banking, commercial banking, payment settlement, agency services, asset management, and retail brokerage. The likelihood of operational risk exposure is calculated from the gross income associated with each business line that serves as an indicator for the scale of business operations by the bank in that specific area of business or business line. This approach is very clumsy since the gross income associated with the business line varies due to numerous reasons both internal and external. Advanced Measurement Approach: The Advanced Measurement Approach equates the regulatory capital requirement with the risk measure generated by the bank’s internal operational risk measurement system using quantitative and qualitative criteria. The banks can use this method only after the approval by the Committee. The Basel II Accord sets the approach for the banks based on their international activity and significant operational risk exposures. Also, when a bank agrees to use a more sophisticated method, it cannot revert back to the easier method without approval from the supervisor. This eventually increases the burden on the banks to choose a sophisticated method. 2.4.6: Trading Book Issues The final segment of the first pillar is the trading book. Basel Committee defines the trading book as a container of both the financial instruments and commodities held either with trading intent or in order to hedge other elements of the trading book. The trading book forms a vital element for the bank since it is the record of the bank’s financial instruments as well as commodities. The Basel II Accord identifies four key principles for the supervisory process. They are listed below. The basic requirements for the eligibility to trading book capital treatment put forth by the Basel II Accord are as follows Clearly documented trading strategy for the position/instrument or portfolios, approved by senior management (which would include expected holding horizon). Clearly defined policies and procedures for the active management of the position Clearly defined policy and procedures to monitor the positions against the bank’s trading strategy including the monitoring of turnover and stale positions in the bank’s trading book 2.3: The Second Pillar- Supervisory Review Process Basel committee was initially set up for the supervising the internationally active banks and produce a common platform for the smooth transactions and cross border finance. The Basel II Accord has established Supervisory Process as one of the three pillars in order to emphasise its stand on supervisory process. The importance of supervisory process is described below. 2.3.1: Importance of Supervisory Process The supervisory review process of the Basel II Accord aims not only to ensure that banks have adequate capital to support all the risks in their business but also intends to encourage the banks to develop and use better risk management techniques in monitoring and managing risks. Alongside, the supervisory process by developing internal capital assessment process and setting capital targets that are commensurate with the bank’s risk profile recognises the importance for bank management in order to improve the atmosphere in the international banking and cross border finance. The Supervisory process evaluates the relationship between the amount of capital held by the bank against the risk, strength and effectiveness of the bank’s risk management eventually guiding the bank and supervising its activities in order to improve the performance of the banks in the international business market and cross border finance. 2.3.2 Four Key Principles of the supervisory review The four key principles identified by the Basel II Accord on the supervisory process is listed below. These principles emphasise on the committee’s focus on supervision and its aim to maintain harmony in the international banking and cross border finance. Principle 1: Banks should have a process for assessing their overall capital adequacy in relation to their risk profile and a strategy for maintaining their capital levels. Principle 2:Supervisors should review and evaluate banks’ internal capital adequacy assessments and strategies, as well as their ability to monitor and ensure their compliance with regulatory capital ratios. Supervisors should take appropriate supervisory action if they are not satisfied with the result of this process. Principle 3: Supervisors should expect banks to operate above the minimum regulatory capital ratios and should have the ability to require banks to hold capital in excess of the minimum. Principle 4: Supervisors should seek to intervene at an early stage to prevent capital from falling below the minimum levels required to support the risk characteristics of a particular bank and should require rapid remedial action if capital is not maintained or restored. 2.3.3: Issues to be addressed There are two specific issues to be addressed by the Supervisory-Review Process. They are Interest Rate Risk in the Banking book: Since it is clear that the Basel Committee’s Basel II Accord Effects on Qatar Banking Basel II Accord Effects on Qatar Banking International banking is increasingly vital for every country in order to create an image for itself in the international finance market Chapter 1: Introduction International banking is increasingly vital for every country in order to create an image for itself in the international finance market. Alongside, the increase in globalisation and the upsurge in outsourcing by multinational companies in the west have created a lot of opportunities for growth in the Middle East and Far Eastern countries. This apparently requires a strong internationally stable financial organization to conduct transactions across the globe without any errors (i.e.) 100% accuracy.   This includes reliability and stability of the bank under extreme situations (like emergency for example), which is highly important to conduct international transactions. Also the potential to meet financial demands during crisis situations is a vital criterion that is considered while presenting themselves in the international market. In addition to the globalisation, outsourcing and export/import growth, there is also a tremendous growth in cross-border finance among the countries in the Middle East and Far East. Along with all these factors the developing nations in the Middle East face a mandatory requirement of a sable international banking system in order to attract foreign investment. The increase in cross border finance activity among the middle eastern countries is also a critical element to be considered for establishing a stable international bank within the nation in order to represent the country in the international finance market. The countries in the Middle East are actively participating in cross-border finance since the dawn of the 21st century. Being a producer of Oil which is a vital ingredient at all levels of life right from day-to-day driving up to power generation for the nation in order to run industries and serve domestic purposes, makes it critical for the nations in the Middle East to have a strong international banking system to conduct transactions across the globe accurately and effectively. Qatar is a growing nation in the Middle East with primary operations in oil and gas export as well increasing its potential in areas of development in technology focusing on IT and communication. The nation has efficient international operations and con ducts financial transactions between western nations as well as with eastern nations. Since the take over of the government by H.H. Sheikh Hamad Bin Khalifa in 1995, the country is making tremendous progress in deploying its hydrocarbon resources in order to penetrate in the international market and present itself as a financially stable nation in the international market. Further to the increase in the international operations by the countries in the Middle East and the Far East, the Bank for International Settlements developed a framework to co-ordinate the international financial operations as well as create a portfolio for the capital measurement and capital standards which every nation involving in international banking operations is expected to adopt in order to stabilise and put in order the international transactions between countries. The Basel II accord produced by Basel Committee on Banking Supervision aims at achieving International Convergence of Capital Measurement and Capital Standards. The arrangement aims to set a minimum standard to be met by its participating nations in order to achieve capital adequacy by the participating nations in the international market. This report aims at analysing the effects of Basel II accord on Qatar’s banking sector. The objectives of this report are stated below: To analyse the Basel II accord and it’s framework for measuring capital adequacy in the nations participating in the international banking transaction. To investigate the banking sector of Qatar and the effect of Basel II accord on its international operations and capital adequacy. To analyse the effect of Basel II accord on the nation’s two major banks having international operations in Qatar namely, Qatar Industrial Development Bank (QIDB) and Commercial Bank of Qatar (CBQ) and to analyse the impact of Basel II Accord on the Banking Sector of Qatar. Report Outline: The report comprises of the following chapters. Chapter 1: Introduction This chapter introduces the reader to the objectives of the report and presents a broad picture of the report to the reader. Chapter 2: Overview of Basel II Accord This chapter presents with an overview of the Basel II accord. The three pillars of Basel II accord namely Minimum Capital Requirements, Supervisory Review Process and Market Discipline are analysed in detail to provide the reader with a detailed understanding of the consent of Basel Committee on Banking Supervision. Chapter 3: Implications and Critical Analysis of Basel II Accord The literature review on the Basel II Accord in chapter 2 is followed by the critical analysis and its implications on nations (business and political) are presented to the reader before proceeding to present the overview of the Qatar Banking sector.    Chapter 4: Overview of Qatar and its Banking Sector This chapter presents the reader with an overview of Qatar as a nation and its business operations in the International market. Alongside, the chapter analyses the country’s growth in the banking sector and its internationally active banks. Chapter 5: Case Study This chapter conducts a case study analysis on Qatar’s two internationally active banks namely Qatar Industrial Development Bank (QIDB) and Commercial Bank of Qatar (CBQ). The effect of Basel II accord on the banks along with an overview of the bank is presented to the reader. The data used to present the case study is primarily obtained from secondary sources like journals, reports and white papers. This is apparently due the fact that the analysis is conducted on a foreign nation as well as the data available from the secondary sources are also reliable as they are published by legitimate organizations and popular journals.   Chapter 6: Results and Discussions The results of the case study analysis and discussions are carried out in this chapter. This chapter aims to present a clearer picture to the reader on the effects of the Basel II accord on the banks analysed. Chapter 7:   Conclusion and Recommendations The conclusions derived from the case results and discussions on the case study and the overall conclusion on the effect of Basel I accord on the Qatar Banking Sector is presented in this chapter. Alongside, this chapter presents a few constructive recommendations based on the results and discussion on the case study. Chapter 2: Overview of Basel II Accord This chapter begins with an overview of the Bank for International Settlements followed by a detailed analysis of the Basel II accord. The Basel II committee is also analysed alongside in order to provide a deeper insight to the readers. 2.1 Bank for International Settlements Overview and it’s Operations The Bank for International Settlements (Bank for International Settlements) is an international organization looking after international monetary and financial co-operation across the globe. This organization acts as the bank for all the central banks of countries participating in the international finance and banking. The Bank for International Settlements profile states that the bank achieves the aforementioned statement through acting as A forum to promote discussion and facilitate decision-making processes among central banks and within the international financial and supervisory community. A centre for economic and monetary research A prime counter party for central banks in their financial transactions and Agent or trustee in connection with international financial operations. Established in 17th Many 1930, it is the oldest financial organization at the international level. The Bank for International Settlements has three major decision making bodies within the bank to achieve its mission. They are The general meeting of member central banks This meeting is held before the end of four months of the end of the banks annual financial year. The meeting addresses all the issues related to business and the member central banks gather to approve the annual financial statement released by the bank. The Board of Directors The board of directors comprise the central bank governors elected from various participating countries. They monitor the overall operation of the bank and take responsibility for actions to be taken and address issues related to disputes and other major international financial cross border problems. The Management Committee The management committee is the first line representative of the Bank for International Settlements and addresses the day-to-day activities of the bank. This committee primarily manages the monetary and financial co-operation services. The services include Meetings: Apart from the Annual general meeting the Bank for International Settlements organizes meetings on a bimonthly basis. This meeting brings the member central banks together with the aim of monitoring the global economic and financial development and discusses issues on its policies in relation to the monetary and financial stability. Committees and Secretariats Bank for International Settlements has several committees to monitor specific problems and issues in the international finance and cross border loans. Alongside, several other committees and organizations focusing on international financial systems have their secretariats in the Bank for International Settlements and work closely with the bank in order to enhance the overall international banking and cross border finance. Basel committee of the Bank for International Settlements is the committee that laid the specifications for capital measurement and capital standard of the central banks participating in the international banking. Research and Statistics: In order to support its meetings and the activities of the organization’s Basel based committees the Bank for International Settlements carries out regular research on economic, monetary, financial and legal areas of the international banking and cross border finance. Investment services for central banks: Bank for International Settlements also provides security, liquidity and return for its central bank members. The three primary points with respect to this identified by the organization are: To provide security, the Bank has built up a sizeable equity capital and ample reserves. It pursues an investment strategy focused on combining diversification benefits with intensive credit and market risk analysis. To ensure liquidity, the Bank stands ready to repurchase its tradable instruments at little cost to its customers and thus respond quickly and flexibly to their needs. The BIS offers an attractive and competitive return on the funds deposited by central banks and international organisations The Bank for International Settlements focuses on serving the financial needs of central banks of the member countries. Alongside, it also acts as a banker managing the funds for numerous international financial institutions. 2.2: Basel committee Overview The Basel committee was established the member central banks of the Bank for International Settlements in order to create a standard for the international banking and capital framework for crass border finance and lending. The committee was initially set up in 1970 and meets regularly four times a year to discuss the progress in international banking and address issues related to business in this context. The member nations of the committee include Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, United Kingdom and United States. The country’s central bank and financial institutions that are not active in banking commercially but monitor the financial operations of the nation both at national and international levels represent the nations. The committee does no possess any authority over its member nations banking systems and the decisions of the committee are never intended to have a legal force on its member nations. The Central bank governors of the Group ten countries endorse the committee’s major initiatives. Also the committee reports to the group ten countries central bank governors. The committee first proposed he capital measurement system in 1988 commonly referred to as ‘Basel Capital Accord’. The committee aims in supervising the international banking operations of the nations across the globe. The decisions of the committee endorsed by the group ten countries address various financial issues in the international market outside the groups as well. The major aim of the committee is the ‘close the gaps in international supervisory coverage’ and to ensure that no foreign banking systems escapes the supervision in order to establish a harmony among the member nations of the Bank for International Settlements as well as in the international market. The committee has promoted supervisory standards in the past few years. Some of its major milestones include the following 1997: Cover Principles for effective banking supervision 1999: Core Principles methodology The committee also presented the Basel II accord with revision on international capital framework. This aims to standardise the capital framework of every bank participating in the international banking as well as sets slabs for minimum capital holdings to be met by the banks in order to qualify for international operations. The committee has numerous subgroups to perform specific tasks of the committee in order to achieve the overall motto of the committee. They are listed below Accord Implementation Group Accounting Task Force Capital Group Capital Task Force Core Principles Liaison Group (with 16 non-G10 countries) Cross-Border Banking Group Electronic Banking Group Joint Forum (with IAIS and IOSCO) Joint IOSCO BCBS Working Group on Trading Book Research Task Force Risk Management Group Securitisation Group Transparency Group The next section provides a detailed analysis of the Basel II accord and its various implications on international banking is discussed in chapter 3. 2.3 The Basel II Accord The Basel II accord was released in June 2004 further to the release of the Basel Accord in 2003. The Basel II is a revised edition of the initial Basel capital accord. It is a framework designed to derive the capital holdings of internationally active banks to meet the international standards and sets a minimum level of capital holding which is a primary criteria for the banks. The Basel II framework is aimed to be applied on a consolidated basis over internationally active banks in order to preserve the integrity of capital in the banks with subsidiaries. Also the framework eliminates the double gearing through this approach. The Basel II accord’s framework is also applied on a fully consolidated basis on any parent holding company which acts as a parent entity within a banking group in order to capture the risk on a consolidated basis without missing any element that contributes considerably to the risk of the overall banking system. Alongside, the framework is also applicable to all internationally active banks at every tier of the banking group. Apart from the aforementioned statements one of the principal objectives of the Basel II Accord is to protect the interest of the depositors essentially to ensure that capital recognised capital adequacy measures is readily available for the depositors. Apparently, these measures are aimed to establish a common platform for international banking and cross border finance across the globe. The scope of application extends to the following segments of the international banking and finance entities. Banking, securities and other financial subsidiaries Significant minority investments in banking securities Insurance entities Significant investment in commercial entities. Deduction of investment pursuant to this part The aforementioned entities are obtained from the Basel Committee report on International Convergence of Capital Measurement and Capital Standards, published in June 2004. The Basel II accord overview is based on this report. The illustration in the fig 1 gives a clear picture of the overall scope of application of the Basel II accord. The Basel II accord is split into three pillars. The first Pillar: Minimum Capital Requirements The following subsections provide a detailed analysis on the elements shown in fig 2. 2.4: The First Pillar The First pillar lays down the minimum capital requirements that every internationally active bank should incorporate.   It is split into the following subsection. 2.4.1:   Calculation of Minimum capital requirements The minimum capital requirement is calculated as a measure of the capital ration. The capital ratio in turn is calculated using the regulatory capital and risk-weighted assets. The requirement of this criterion is that the capital ration must be a minimum of 8% or more in order to be eligible for the international activities. Also, in case of a two tier system the capital in tier 2 must not be greater than the tier 1 capital (i.e.) the tier 2 capital can be a maximum of 100% of the tier 1 capital. The capital is accounted from the following sources    Regulatory capital: The minimum accounting capital requirements for the financial institution encompasses the regulatory capital. The Basel II accord has withdrawn the provision to include general provisions in tire 2 capital, which was in effect in the 1988 Accord under the Internal Ratings-Based (IRB) approach.   Furthermore the accord has lain down that the banks using the Internal Ratings Based approach to their other assets mus t compare the amount of total eligible provision with the total expected losses amount to the bank. This eventually increases the capital holding of the bank in order to meet the criteria. Risk Weighted Assets: The Basel II Accord calculates the total risk-weighted assets by multiplying the capital requirement for market risk and operational risk by the reciprocal of the minimum capital ratio of 8% and adding the resulting value to the sum of risk weighted assets for credit risk. Even though this is subject to review the approach lays enormous burden on the bank to increase its minimum capital holdings. Apparently the Basel II Accord is aiming to establish that the internationally active banks must have enough capital to meet its short comings without depending on loans and cross border finance to address its immediate requirements and short comings. The idea though being novel is very intense for the banks to maintain the required minimum capital. 2.4.2: Credit Risk-The Standardised Approach Under this method the Basel committee provides the internationally active banks a choice for calculating their capital requirements for credit risk. The first approach is the standardised method of measuring the credit risk through support from external credit assessments. This method is approved by the Basel committee while the other method is yet to explicitly approved by the committee. Under the alternate method of calculating the credit risk, the bank supervisor can allow banks to use their internal rating systems for calculating the credit risk. Under both the methodologies one should not oversee the fact that the Basel committee is very keen in assessing the credit risk on the capital holdings of the internationally active banks. Even though this is appreciated, the rules are very stringent making it very difficult for the banks for adopt easily. 2.4.3 Credit Risk- Internal Ratings Based Approach The Basel II committee has given supervisory approval for banks to use the Internal Ratings-Based approach to determine their capital requirement for a given exposure subject to certain minimum conditions and disclosure requirements. The risk components considered include Measures of the probability of default (PD), Loss given default (LGD), The exposure at default (EAD), Effective maturity (M) The Basel II accord states that â€Å"The Internal Ratings Based Approach is based on the measure of unexpected loses (UL) and Expected Loses (EL). Under the Internal Ratings Based Approach, the committee expects the bank to categories their exposures in order to identify the different underlying risk characteristics. The categories include corporate, sovereign, bank, retail and equity. These are identified as the corporate asset classes and the approach further expects the bank to identify the subclasses associated with the asset classes in order to measure the credit risk associated with the exposure. The detailed analysis of every corporate class and its associated subclasses is beyond the scope of this report. In essence the Internal Ratings Based Approach gives the bank more liberty to calculate its credit-risk on the minimum capital requirement for a given exposure. But the producers laid by the Basel II Accord is very tedious to adopt and implement for every corporate class exposure and identifying the subclasses associated. 2.4.4: Credit Risk- Securitisation Framework The Basel Committee in its revised accord, has made it mandatory for the banks to apply the Securitisation Framework for determining regulatory capital requirements on exposure arising from traditional and synthetic Securitisation or similar structures that contain features common to both.   The Basel II accord also states that the capital treatment of the Securitisation exposure must be determined on the basis of the economic substance rather than the legal form of the structure. It is apparent that the securities can be structured in many different ways and the committee has approved the use of either the traditional Securitisation or the synthetic Securitisation framework. Also the Basel II accord expects the supervisor to look at the economic substance of transaction in order to determine whether it should be subject to Securitisation framework or not. This gives the discretionary power to the supervisor to decide on a specific transaction whether to include it in the framework or to eliminate it from the framework towards determining the regulatory capital framework. The traditional Securitisation and the synthetic Securitisation framework are discussed below. Traditional Securitisation: The Basel II Accord defines the traditional framework as â€Å"a structure where the cash flow from an underlying pool of exposures is used to service at least two different stratified risk positions or tranches reflecting different degrees of credit risk†. The advantage with this approach is that the payment to the investors is based on the performance of the specified underlying exposures rather than a derivation from an obligation of the entity originating those exposures. Synthetic Securitisation â€Å"A synthetic Securitisation is a structure with at least two different stratified risk positions or tranches that reflect different degrees of credit risk where credit risk of an underlying pool of exposures is transferred, in whole or in part, through the use of funded (e.g. credit-linked notes) or un-funded (e.g. credit default swaps) credit derivatives or guarantees that serve to hedge the credit risk of the portfolio†. This approach leaves the return to the investors in the hands of the performance of the underlying pool. Apparently, the risk associated is higher since the performance can be affected by numerous causes. From the above-mentioned approaches the Basel II accord’s stand for evaluating the capital and minimum capital requirements are evident. 2.4.5: Operational Risk The operational risk is defined by the Basel Committee as the risk associated with the loss resulting from inadequate or failed internal processes, people, systems or external events. This includes the legal risk with the exclusion of strategic and reputational risk. The Basel II Accord has approved three methods for calculating the operational risk and risk sensitivity with the implications on minimum capital requirements. They are: (i) The Basic indicator approach, (ii) the Standardised Approach and (iii) Advanced Measurement Approach. Basic Indicator Approach: In this case the banks should hold capital for the operational risk equal to the average over the past three years of a fixed percentage. This is expressed as a formula below KBIA = [ÃŽ £ (GI1†¦n x ÃŽ ±)] Where KBIA = the capital charge under the Basic Indicator Approach GI = annual gross income, where positive, over the previous three years n = number of the previous three years for which gross income is positive ÃŽ ± = 15%, which is set by the Committee, relating the industry wide level of required capital to the industry wide level of the indicator. This formula is obtained from the Basel II accord for the purpose of reader understanding. Standardised Approach: The standardised approach divides the bank’s activities into eight-business lines namely corporate finance, trading sales, retail banking, commercial banking, payment settlement, agency services, asset management, and retail brokerage. The likelihood of operational risk exposure is calculated from the gross income associated with each business line that serves as an indicator for the scale of business operations by the bank in that specific area of business or business line. This approach is very clumsy since the gross income associated with the business line varies due to numerous reasons both internal and external. Advanced Measurement Approach: The Advanced Measurement Approach equates the regulatory capital requirement with the risk measure generated by the bank’s internal operational risk measurement system using quantitative and qualitative criteria. The banks can use this method only after the approval by the Committee. The Basel II Accord sets the approach for the banks based on their international activity and significant operational risk exposures. Also, when a bank agrees to use a more sophisticated method, it cannot revert back to the easier method without approval from the supervisor. This eventually increases the burden on the banks to choose a sophisticated method. 2.4.6: Trading Book Issues The final segment of the first pillar is the trading book. Basel Committee defines the trading book as a container of both the financial instruments and commodities held either with trading intent or in order to hedge other elements of the trading book. The trading book forms a vital element for the bank since it is the record of the bank’s financial instruments as well as commodities. The Basel II Accord identifies four key principles for the supervisory process. They are listed below. The basic requirements for the eligibility to trading book capital treatment put forth by the Basel II Accord are as follows Clearly documented trading strategy for the position/instrument or portfolios, approved by senior management (which would include expected holding horizon). Clearly defined policies and procedures for the active management of the position Clearly defined policy and procedures to monitor the positions against the bank’s trading strategy including the monitoring of turnover and stale positions in the bank’s trading book 2.3: The Second Pillar- Supervisory Review Process Basel committee was initially set up for the supervising the internationally active banks and produce a common platform for the smooth transactions and cross border finance. The Basel II Accord has established Supervisory Process as one of the three pillars in order to emphasise its stand on supervisory process. The importance of supervisory process is described below. 2.3.1: Importance of Supervisory Process The supervisory review process of the Basel II Accord aims not only to ensure that banks have adequate capital to support all the risks in their business but also intends to encourage the banks to develop and use better risk management techniques in monitoring and managing risks. Alongside, the supervisory process by developing internal capital assessment process and setting capital targets that are commensurate with the bank’s risk profile recognises the importance for bank management in order to improve the atmosphere in the international banking and cross border finance. The Supervisory process evaluates the relationship between the amount of capital held by the bank against the risk, strength and effectiveness of the bank’s risk management eventually guiding the bank and supervising its activities in order to improve the performance of the banks in the international business market and cross border finance. 2.3.2 Four Key Principles of the supervisory review The four key principles identified by the Basel II Accord on the supervisory process is listed below. These principles emphasise on the committee’s focus on supervision and its aim to maintain harmony in the international banking and cross border finance. Principle 1: Banks should have a process for assessing their overall capital adequacy in relation to their risk profile and a strategy for maintaining their capital levels. Principle 2:Supervisors should review and evaluate banks’ internal capital adequacy assessments and strategies, as well as their ability to monitor and ensure their compliance with regulatory capital ratios. Supervisors should take appropriate supervisory action if they are not satisfied with the result of this process. Principle 3: Supervisors should expect banks to operate above the minimum regulatory capital ratios and should have the ability to require banks to hold capital in excess of the minimum. Principle 4: Supervisors should seek to intervene at an early stage to prevent capital from falling below the minimum levels required to support the risk characteristics of a particular bank and should require rapid remedial action if capital is not maintained or restored. 2.3.3: Issues to be addressed There are two specific issues to be addressed by the Supervisory-Review Process. They are Interest Rate Risk in the Banking book: Since it is clear that the Basel Committee’s