BIS rules backfired in efforts to make banks safer

Article Abstract:

Geneva-based Bank of International Settlements (BIS) adopted international capital-adequacy standards in 1988 to make banks safer by leveling the playing field among international banks. The standards required banks to maintain minimum capital equal to at least 8% of risk-weighted assets by the end of 1992. However, some Japanese and Swedish banks, which have an average core capital of 2.87% and 1.36%, respectively, had to adopt riskier loans to meet the standards. Although these generated increased short-run retained earnings, Japan and Sweden faced severe banking crises as 1992 neared.

Standards, Sweden, Bank of International Settlements

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Bond issue is facing snags

Article Abstract:

Investors are encouraged by the Malaysian government's proposal to establish a bailout fund for its banks, which serves as a signal that the country is finally facing its serious economic woes. However, fund managers caution Malaysia that it will need to provide a considerable yield spread over benchmark US Treasurys to offset the growing risk in the Malaysian economy. Malaysia hopes to amass 25 bil ringgit, according to Datuk Seri Anwar.

Malaysia, Domestic economic assistance

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With Japan on the road toward reform, here are some thoughts on how to end the banking fiasco

Article Abstract:

Japan's road to banking reform should be coupled with efforts to reform corporate, tax and legal systems in the country. Japan has not failed to reform its banking system effectively and it now needs more funds is it is to survive further. The government must allow weak banks to fall and strong ones to stand on their own if they want and expect the banking system to regain its standing.

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