Giovanni Carosio

Towards the revision of the capital framework

  • Abstract

Informations and abstract

Keywords: Basel 2, capital regulation, procyclicality, liquidity risk.

In response to the financial crisis, last December the Basel Committee for Banking Supervision issued, under the auspices of the G20 leaders and the Financial Stability Board, a regulatory proposal for strengthening the resilience of the financial system. Banks will be required to improve the quality of their capital and to hold it in amounts that better reflect the relative riskiness of their different exposures; leverage will be curtailed; the procyclical effects of regulation will be mitigated; the liquidity profile of institutions will be more balanced. In the coming months a comprehensive impact assessment will allow to calibrate the new rules, which should be finalised by the end of the year and enter into force at the end of 2012.

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