Munich Personal RePEc ArchiveBASEL III: responses to consultative documents, vital aspects of the consultative processes and the journey culminating in the present framework (Part 1)MarianneOjoauthorThis paper is aimed at providing a comprehensive overview of, and responses to, four very vital components of the consultative processes which have contributed to the new framework known as Basel III. The paper will approach these components in the order of the consultative processes, namely, the capital proposals, the liquidity proposals and the Proposal to ensure the loss absorbency of regulatory capital at the point of non-viability. The capital proposals comprise proposals aimed at strengthening the resilience of the banking sector, the proposal relating to international framework for liquidity risk measurement, standards and monitoring and, the countercyclical capital buffer proposal. Whilst the capital proposals have been welcomed, there has been growing realisation since the aftermath of the recent Financial Crises that banks which have been complying with capital adequacy requirements could still face severe liquidity problems. As well as highlighting the importance of introducing counter cyclical capital buffers, the response to the countercyclical proposal draws attention to the need for greater focus on more forward looking provisions, as well as provisions which are aimed at addressing losses and unforeseen problems attributed to “maturity transformation of short-term deposits into long term loans.” The Basel Committee’s consultative document on the “Proposal to Ensure the Loss Absorbency of Regulatory Capital at the Point of Non Viability” sets out a proposal aimed at “enhancing the entry criteria of regulatory capital to ensure that all regulatory capital instruments issued by banks are capable of absorbing losses in the event that a bank is unable to support itself in the private market.” Amongst other issues addressed, the response to the consultative document highlights why the controlled winding down procedure also constitutes a means whereby losses could still be absorbed in the event that a bank is unable to support itself in the private market.K2 - Regulation and Business LawG21 - Banks ; Depository Institutions ; Micro Finance Institutions ; MortgagesE3 - Prices, Business Fluctuations, and CyclesG01 - Financial Crises2010-10MPRA Paper

Copyright Agreement

1. The author hereby affirms that he or she accepts the editorial guidelines given at https://mpra.ub.uni-muenchen.de/information.html.

2. The author hereby grants to the University Library of the Ludwig-Maximilians-Universität (LMU) a non-exclusive licence to make the electronic version of the uploaded work publicly accessible through the "Munich Personal RePEc Archive" (MPRA) repository. This licence includes abstracts and metadata and is valid for the duration of the statutory protection period, without territorial limitation. The licence furthermore includes the right to replicate the work as required, especially for the purposes of including the work and/or abstracts and metadata in electronic databases and of employing digital or other transmission technology to make this data available to large numbers of users, using either services invoked by user request or services initiated by the repository, and encompassing all forms of transmission (cable, wireless, satellite etc.) and protocol (TCP/IP, http, ftp etc.).

3. This contract entitles the University Library to transfer the licence granted herein either partially or wholly to a third party and to grant non-exclusive rights to other repositories without requiring the authors explicit permission.

4. The author hereby affirms that no third-party rights are infringed by the electronic publication of the work and undertakes to indemnify the University Library of the LMU against any third-party claims relating to the infringement of copyright legislation or exclusive usage rights which may result from the publication of the work through the University Library repository. The author hereby undertakes to reimburse any charges resulting from a rights infringement caused by him or her.

5. In the event that the author is not the sole author of the work in question, he/she hereby declares that he/she has been empowered by his/her co-authors to grant the above-mentioned usage licence.

6. In the event that the person who is uploading the work in question is not the author of this work, he/she hereby declares that he/she has been empowered by the author(s) to grant the above-mentioned usage licence.

7. The author continues to retain the usage rights to his or her work and may also bestow these rights elsewhere provided this does not curtail the rights granted to the University Library of the LMU in this declaration.

Clicking on the deposit button below indicates your agreement to these terms.

As the submission cannot be modified once it is accepted, please submit only if you are absolutely sure that no further changes are needed. Otherwise select the "Save for Later" button and review your submission. By doing so, nothing you have entered will be lost and you can resume your submission any time in the future.