What is it?
Basel II is shorthand for the "New Basel Capital Accord.

The accord seeks to adjust a banks regulatory capital, according to its economic capital. Individual loan commitments will be analysed. Thus giving a more accurate picture of the risk that the bank has to manage. The higher risk, higher the regulatory capital.

Who?
The accord is being steered by the Bank for International Settlements. Central banks and regulatory authorities in the major financial countries, (US, Japan, Germany etc) are also major players.

When
The accord is due to be in place in 2006.

How?
The size and complexity of the financial markets means calculating risk is an onerous task. This leads to a requirement for massive amounts of computing power coupled with software with complex algorithms.