Basel III: An Evaluation of New International Banking Regulations
David Blaylock and David Conklin
Richard Ivey School of Business, Canada
Volume 7: 2012, pp. 27-46; ABSTRACT
The 2007/08 financial crisis and subsequent recession precipitated discussions on strengthening the stability of financial systems. A central focus have been negotiations to create an internationally consistent regulatory framework for the world’s banks. These negotiations have included improving the capital base of banks, supplementing the risk-based capital requirements with a leverage ratio, creating counter-cyclical capital buffers, introducing measures to limit counterparty risk, and establishing required liquidity ratios. However, serious gaps remain. Some nations may not agree to implement the new regulations. Non-bank financial institutions are not included. National regulations will still differ. Unintended consequences may have negative effects. Consequently, further negotiations to strengthen the world’s financial systems will likely continue.
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