No longer content with setting the world’s capital and liquidity standards, the Basel Committee now wants to take on the mantle of global regulatory policeman.
This from the FT’s chief regulation correspondent Brooke Masters:
Teams of global regulators will fan out across the world from next year to ensure that new tougher capital and liquidity standards are enforced correctly, the chairman of the Basel Committee on Banking Supervision said on Wednesday.
Stefan Ingves, the chairman, notes that this new role “represents a significant practical and cultural shift” for a committee that has in the past relied more on persuasion than policing.
However, the very fact that the chairman believes Basel cops are needed to ensure Basel III is properly enforced highlights a similarly significant shift in attitudes towards its regulations over recent years. Read more
Minutes of the Riksbank’s July 4 policy meeting, published today, see deputy governor Lars Nyberg become the latest central banker to lambast the eurozone authorities over their handling of the Greek crisis. From the minutes:
Economically it would have paid off to find a solution to the Greek crisis a long time ago, given the costs in the form of less efficient markets and falling stock markets that the uncertainty has led to. However, Greece is now part of the euro area and this means that the crisis must be resolved politically and at the European level. Mr Nyberg noted that the European mechanisms for resolving crises do not appear to work particularly well.
Financial market investors are wondering, and justifiably so, how a crisis in a larger country could possibly be managed if it is not even possible to reach agreement on how to deal with Greece.
Quite. Because of this, he says, “a relatively minor economic crisis may quickly become a major political crisis”. (Note that this was before events in Italy took a turn for the worse.) Read more
The blueprint for Basel III is more than a year old. And there is consensus on its fundamental tenets – to hold more and better quality capital, for liquidity requirements, leverage ratios, and countercyclical buffers.
Yet the devil is in the detail. There remains disagreement on the calibration of countercyclical buffers, not to mention what form the leverage ratio and liquidity buffers should take.
So Sunday’s appointment of Riksbank governor Stefan Ingves to chair the Basel Committee is significant. Read more