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Basel iii
"The situation is going to get worse before it gets better
Regulators failed to regulate. They thought that excesses were
random and that the market would always come to an equilibrium.
They were adopting the wrong paradigm
We need a Basel III for a new order"
George Soros
Investor,
author, philanthropist and political activist
Mr Soros blamed regulation for the current crisis.
“It will have
to be reworked and we need a Basel III for a new order”
he
said. He believes that the Basel II agreement that governs how
banks have to maintain capital is totally misconceived.
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"The financial
world changes all the time and those who supervise and regulate
the financial world have to be prepared to change too. So I do not
have any doubt that soon after Basel II is in place, we will have
to start to think about Basel III.
I do not like to say this to my colleagues in the Basel Committee because they say “oh no, I have been up all night for years doing Basel II”. But there is no doubt that the task will have to be engaged" Andrew Crockett Former general manager of the Bank of International Settlements (BIS) President of JP Morgan Chase International -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Shortcomings in Basel ii "Supervisors should, at a minimum, be aware of the increasing sophistication with which banks are responding to the existing regulatory framework" Alan Greenspan, October 1998 (Alan Greenspan was the chairman of the Board of Governors of the US Federal Reserve System) -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Basel II is much better than Basel I. But, it does not mean that it is good enough. There are some very serious shortcomings and has so many loose ends. Basel II is more risk sensitive than Basel I but it is NOT really risk sensitive. We do have a new risk, operational risk, but... Reputational risk is not an operational risk Systemic risk (disruption at a firm or a market segment causes difficulties to other firms or market segments) is not an operational risk Strategic risk (the risk of losses or reduced earnings due to failures in implementing strategy) is not an operational risk To learn more you may visit: www.basel-iii-accord.com |
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