Chiaramonte gives an overview of the main lessons learned from the GFC of 2007–2009 with reference to bank liquidity. The chapter underlines that despite the high levels of capitalization of many banks before the crisis, they too experienced serious difficulties due to insufficient liquidity buffers. Thus, the author provides an evidence that capital and liquidity are equally important for bank stability, in light of which, in 2010, the Basel Committee reviewed the Basel II Accord and introduced new prudential regulations in its place, the so-called Basel III Accord. Finally, Chiaramonte concludes the chapter summarizing both the main strategies adopted by banks to meet the Basel III liquidity ratios and the micro and macroeconomic implications of these requirements identified by the existing literature.
- Basel Committee on Banking Supervision (BCBS). (2017, December). Basel III: Finalising Post-crisis Reforms. Basel: Bank for International Settlements (BIS).Google Scholar