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Assessing the Finalised Basel III Banking Regulation Regime

  • Adrian Blundell-Wignall
  • Paul Atkinson
  • Caroline Roulet
Chapter

Abstract

The authors summarise the final version of Basel III, reducing thousands of pages to a necessary few. They argue that supervisors appear to believe the problem all along was just the need for greater granularity and more model-based sensitivity, rather than fundamental flaws in the framework itself (its one-size-fits-all and portfolio invariance assumptions; and contaminating bank risk models by linking them to regulatory capital charges). They opine that banks have defended their risky business models very well and thus the reform process is not over: separating investment banking and imposing a sufficient binding leverage ratio (LR) remain on the table. They suggest that such a pre-emptive approach is needed to deal with the underpricing of risk and are dismissive of mechanical modelling of stress scenarios to estimate capital requirements.

References

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Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Adrian Blundell-Wignall
    • 1
  • Paul Atkinson
    • 2
  • Caroline Roulet
    • 3
  1. 1.University of Sydney and OECD (consultant advisor to the Secretary General, and former Director of the Financial and Enterprise Affairs Directorate)ParisFrance
  2. 2.NHA Economics, Ltd.ParisFrance
  3. 3.Organisation for Economic Co-operation and DevelopmentParisFrance

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