Advertisement

ERA Forum

, Volume 20, Issue 1, pp 81–97 | Cite as

The long ‘journey’ of banks from Basel I to Basel IV: has the banking system become more sound and resilient than it used to be?

  • Marco BodelliniEmail author
Article
  • 161 Downloads

Abstract

The amount of capital that banks have to hold has been raised over time due to the adoption of the increasingly demanding standards issued by the Basel Committee on Banking Supervision. Accordingly, in December 2017, the so-called Basel IV standards have been published with the final aim of further increasing the capital of banking institutions. Despite the criticisms, capital requirements are an effective tool to enhance the soundness of banks and in turn to help maintain financial stability. Nevertheless, the need still arises to make the legal framework increasingly less ‘one-size-fits-all-driven’, more conscious of the subjective differences among market participants and thereby more efficient.

Keywords

Basel IV Bank capital Basel Committee on Banking Supervision 

Notes

References

  1. 1.
    Avgouleas, E.: Governance of Global Financial Markets: The Law, the Economics, the Politics. Cambridge University Press, Cambridge (2012) CrossRefGoogle Scholar
  2. 2.
    Balthazar, L.: From Basel 1 to Basel 3: The Integration of State of Art Risk Modelling in Banking Regulation. Palgrave Macmillan, New York (2006) CrossRefGoogle Scholar
  3. 3.
    Bank for International Settlements: History of the Basel Committee. Available at https://www.bis.org/bcbs/histiry.htm
  4. 4.
    Bank for International Settlements: Governors and Heads of Supervision Finalise Basel III Reforms (2017). Available at https://www.bis.org/press/p171207.htm
  5. 5.
    Barr, M., Jackson, H., Tahyar, M.: Financial Regulation: Law and Policy. Foundation Press, Eagan (2016) Google Scholar
  6. 6.
    Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards (1988). Available at www.bis.org
  7. 7.
    Basel Committee on Banking Supervision, Basel II: International Convergence of Capital Measurement and Capital Standards: A Revised Framework (2006). Available at www.bis.org
  8. 8.
    Basel Committee on Banking Supervision: Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems (2011). Available at www.bis.org
  9. 9.
    Basel Committee on Banking Supervision: Finalising Post-Crisis Reforms (2017). Available at www.bis.org
  10. 10.
    Basel Committee on Banking Supervision: High Level Summary of Basel III Reforms (2017). Available at www.bis.org
  11. 11.
    Belratti, A., Paladino, G.: Basel and regulatory arbitrage. Evidence from financial crises. J. Empir. Finance 39, 180–196 (2016) CrossRefGoogle Scholar
  12. 12.
    Bodellini, M.: Attività Bancaria e Impresa Cooperativa. Cacucci Editore, Bari (2017) Google Scholar
  13. 13.
    Bodellini, M.: From systemic risk to financial scandals: the shortcomings of US regulation on hedge funds. Brooklyn J. Corp. Financ. Commer. Law 11, 417–467 (2017) Google Scholar
  14. 14.
    Bodellini, M.: Greek and Italian ‘Lessons’ on bank restructuring: is precautionary recapitalisation the way forward? In: Cambridge Yearbook of European Legal Studies, 144–164 (2017) Google Scholar
  15. 15.
    Bodellini, M.: Corporate governance of banks and financial stability: critical issues and challenges ahead. Bus. Law Rev. 39, 160–165 (2018) Google Scholar
  16. 16.
    Bodellini, M.: To bail-in, or to bail-out, that is the question. Eur. Bus. Organ. Law Rev. 19, 365–392 (2018) CrossRefGoogle Scholar
  17. 17.
    Brierley, P.: Ending too-big-to-fail: progress since the crisis, the importance of loss-absorbing capacity and the UK approach to resolution. Eur. Bus. Organ. Law Rev. 18, 457–477 (2017) CrossRefGoogle Scholar
  18. 18.
    Cannata, F., Quagliariello, M.: Basel III and Beyond: A Guide to Banking Regulation After the Crisis. Risk Books, London (2011) Google Scholar
  19. 19.
    Carney, M.: To G20 Leaders, Financial Stability Board (FSB) Chairman’s Memo to G20 Leaders (2017). Available at https://www.fsb.org/wp-content/uploads/P030717-1.pdf
  20. 20.
    Cornford, A.: Basel II: The Revised Framework of 2004, United Nations Conference on Trade and Development (UNCTD). Discussion Paper No. 178 (2005) Google Scholar
  21. 21.
    Cranston, R., Avgouleas, E., Van Zwieten, K., Hare, C., Van Sante, T.: Principles of Banking Law, 3rd edn. Oxford University Press, Oxford (2017) Google Scholar
  22. 22.
    Gleeson, S.: Bank capital regulation and sovereign debt restructuring. Cap. Mark. Law J. 13, 467–482 (2018) CrossRefGoogle Scholar
  23. 23.
    Greenspan, A.: Speech Given at the Federal Reserve of Chicago Bank Structure Conferences, 7 May 2010. Available at www.chicagofed.org
  24. 24.
    Jones, E., Zeitz, A.: The limits of globalizing Basel banking standards. J. Financ. Regul. 3, 89–124 (2017) CrossRefGoogle Scholar
  25. 25.
    Lastra, R.: International Financial and Monetary Law, 2nd edn. Oxford University Press, Oxford (2015) Google Scholar
  26. 26.
    Lastra, R., Bodellini, M.: Soft Law and Sovereign Debt. Intergovernmental Group of Experts on Financing for Development, United Nations (2018) Google Scholar
  27. 27.
    Magnus, M., Margerit, A., Mesnard, B., Korpas, A.: Upgrading the Basel Standards: From Basel III to Basel IV. Economic Governance Support Unit, European Parliament Briefing Paper PE 587.361 (2017). Available at https://www.europari.europa.eu/RegData/etudes/.../IPOL_BRI%282016%29587361_EN.pdf
  28. 28.
    McHenry, P.: Letter sent to the Chair of the Board of Governors of the Federal Reserve System, 31 January 2017. Available at www.ftalphaville-cdn.ft.com
  29. 29.
    Miles, D., Yang, J., Marcheggiano, G.: Optimal Bank Capital. Bank of England. External MPC Unit. Discussion Paper No. 31 (2011) Google Scholar
  30. 30.
    PricewaterhouseCoopers: ‘Basel IV’: Big Bang—or the Endgame of Basel III? BCBS finalises on Risk Weighted Assets (RWA), December 2017 Google Scholar
  31. 31.
    Sands, P., Liao, G., Ma, Y.: Rethinking operational risk capital requirements. J. Financ. Regul. 4, 1–34 (2018) CrossRefGoogle Scholar
  32. 32.
    Schneider, S., Schiock, G., Koch, S., Schneider, R.: Basel ‘IV’: What’s Next for Banks?: Implications of Intermediate Results of New Regulatory Rules for European Banks. McKinsey Global Risk Practice Paper (2017) Google Scholar
  33. 33.
    Shakdwippe, P., Mehta, M.: From Basel I to Basel II to Basel III. Int. J. New Tech. Res. 3, 66–70 (2017) Google Scholar
  34. 34.
    VÖB, DekaBank, DZ BANK, BayernLB, Helaba, LBB, LBBW, NORD/LB, ApoBank: The Consequence of ‘Basel IV’—A Quantitative Impact Study, 25 May 2018 Google Scholar
  35. 35.
    Walker, G.: Basel III market and regulatory compromise. J. Bank. Regul. 12, 95–99 (2011) CrossRefGoogle Scholar
  36. 36.
    Walker, G.: Banks and Banking. In: Walker, G., Purves, R. (eds.) Financial Services Law, 4th edn. Oxford University Press, Oxford (2018) Google Scholar
  37. 37.
    Yeoh, P.: Basel IV: international bank capital regulation solution or the beginning of a solution? Bus. Law Rev. 39, 176–183 (2018) Google Scholar

Copyright information

© Europäische Rechtsakademie (ERA) 2019

Authors and Affiliations

  1. 1.Queen Mary University of LondonLondonUK

Personalised recommendations