Michael Shashoua: Basel III’s Fault Lines
The Basel Committee on Banking Supervision’s disclosure that not all jurisdictions will be ready by January to implement Basel III rules or the Capital Requirements Directive (CRD) IV that frames these rules is not much of a surprise. While Stefan Ingves, chairman of the Basel Committee, says that “it is clear that not all jurisdictions will be ready in time,” he still points to progress on adoption. “It is essential that all jurisdictions continue to press ahead and finalize regulations by the deadline or as soon as possible thereafter,” he says. The question now is whether the Committee can make the right kind of revisions to the Basel III rules to make it acceptable in enough European countries or worldwide and still retain the necessary teeth to make the rules effective.
The global will to impose stricter capital adequacy requirements is weak, considering the raft of other economic problems, says Ed Ventura, president of consultancy Ventura Management Associates. There’s the Eurozone crisis, slowing global growth, high unemployment, and the US presidential election, which freezes further regulatory action in the US. “The legislative priorities of the jurisdictions that will be impacted by Basel III are more consumed with resolving some of those issues than with generating rules to enable Basel III,” says Ventura.
Economic Boost
Delaying Basel III could even boost the global economy by holding off additional restrictions to capital flows, notes Ventura. “Increased capital requirements will further restrict lending to small business and to individuals which will further slow growth,” he says.
Since Basel II took many years to gain acceptance, it wouldn’t be surprising if Basel III took an equal amount of time.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Northern Trust offers internal fund accounting, data tools to clients
Regulations and a mandate to enhance quality and transparency in a bid to improve the investor experience are pushing buy-side firms to have more oversight of their third-party providers.
EU firms press for faster move to T+1 after smooth US rollout
Following the example set by North America, 70% of attendees at a European hearing on shorter settlement cycles favored a Q4 2027 switch to next-day settlement.
Finra clears hurdle with CAT launch, but several others remain
Two major components of the consolidated audit trail are now in place. But wrangling over the CAT’s future continues.
Bloomberg, industry bodies push back on Cboe’s proposed OEMS rule change
Some industry bodies disagree with the options exchange’s proposal to carve its Silexx OEMS out of the SEC’s definition of an exchange facility and place it into a separate business line.
GenAI: US Fed reveals its five use cases
Internal sandbox used to assess viability and risks; coding and content generation on the agenda.
Zeros and ones: Industry contemplates T+0 as the next step
With the North American transition to T+1 settlement complete, same-day settlement could be the next goalpost set, though skeptics are many.
The IMD Wrap: Déjà vu as exchange data industry weighs its options
Max highlights some of WatersTechnology’s recent reporting on data costs and capacity issues facing the options industry, and asks, haven’t we seen this before somewhere?
FRTB data quality issues persist amid shifting implementation dates
Banks are finding market and reference data challenges posed by the FRTB’s standardized model tricky, compounded by uncertainty over when the regulation will take effect.