Bolstering Basle's cushion

Article Abstract:

Regulators aim to prevent banks from losing money, and the Basle Accord sets minimum capital standards. The standards do not take into account risk levels of loans, an omission that the Basle committee aims to tackle. Different methods of measuring risk have been proposed, including usage of rating agencies' data, or usage of banks' internal data on credit ratings . The latter proposal has gained favor, though there are problems in making cross-border comparisons. Banks could also issue subordinated debt as a constraint affecting their ability to take risks.

Editorial, Bank capital

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Better than Basle

Article Abstract:

Government efforts to strengthen banks can actually make the banking system less stable, since they mean that taxpayers carry the risks resulting from imprudent decisions by banks. Depositors have less incentive to ensure that banks are being run properly. Banking regulations are needed precisely because deposits are protected. Changes have been proposed to the Basle standards, and they include a plan to use banks' risk management models, as well as credit rating agencies.

Capital assets

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Basle brush

Article Abstract:

There is a move to reform the Basle Accord, an agreement on the capital needed by internationally active banks, put aside against the banks' loans. There is a disagreement over German mortgage banks, which seek low capital requirements, which US regulators deem inadequate. Regulatory capital ought to be in line with levels of risks of loans, but this is not always easy to calculate. The Basle Accord may be worse than no regulations at all, according to some critics.

Financial institutions

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