Regulators downplay Basel III impact

20 Aug 2010

The fight over appropriate levels of bank capital warmed up again this week when the Financial Stability Board and the Basel Committee on Banking Supervision estimated that the short term economic cost of tightened capital and liquidity standards will not exceed 0.3% of GDP. They could even be less if mitigated by monetary policy or implemented over a longer period.

The finding, based on modelling by central banks around the world, puts regulators at odds with industry bodies such as the Institute of International Finance which have estimated that Basel III could hit global GDP by as much as 3% compared to the baseline.

Moreover, a separate BCBS ...

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