"Basel 2" is a convenient shorthand for the proposals - first floated in June 1999 and expanded several times since then - by the BIS-based Basel Committee on Banking Supervision for how banks should match capital with the risk that they take on.  It is supposed to replace the 1988 Accord, which first told banks that they have to maintain capital equivalent to a certain percentage of their risk-adjusted assets.  The 1988 Accord just covered credit risk - and it was crude.  In the mid-1990s, it was expanded to market risk.  Now, it is proposed that the credit risk element will be made more complicated (though different approaches are permitted for more or less sophisticated institutions), that a new capital charge will be added for "operational risk" (IT disasters, fraud, Nick Leeson), that two other regulatory "pillars" will be introduced covering how a regulator judges a bank's management and what sort of information should be made available to both bank and regulator.

It is all hideously complicated yet, until recently, no one believed Basel 2 could be stopped: it had too much political momentum.  But in mid-December, the Committee announced it would delay its next consultative paper to take into account the growing chorus of concern - though it still insists that the new regime must be in place by 2005 (fat chance). This collection of (very brief) essays explains why the Committee has got its knickers in a twist.