The Policy Forum is an on-line community dedicated to building dialog on critical financial policy issues. Its goal is to broaden and deepen discussions between scholars, policy-makers, and market participants on topics of current interest and to shape practical, actionable ways to strengthen and protect the financial system.
Submit your comments to [email protected].
Bank Capital and Liquidity Rules Forum
Moderated by CFS Senior Fellow Robin L. Lumsdaine
A central lesson of the recent crisis is that banks worldwide lacked sufficient, high quality capital to absorb large unexpected losses. Even well-capitalized banks found themselves at risk when valuations plummeted and market turmoil disrupted their traditional sources of funding. Since then, officials and regulators have outlined a range of proposals aimed at strengthening bank capital and liquidity.
A recent GlobeAsia Op-Ed by Steve Hanke, re-distributed by the Center for Financial Stability
(CFS), generated strong feelings among the CFS readership. Dissent on the critical issue of bank capital is not unique to the CFS – as evidenced by the public skirmish between JP Morgan Chairman Jamie Dimon and Bank of Canada Governor Mark Carney. But bank capital issues are deeper and more complex than headlines and op-eds suggest.
We therefore asked Senior Fellow Robin Lumsdaine to initiate a more in-depth discussion and to serve as moderator for our Bank Capital and Liquidity Rules Forum, to facilitate further discussion and debate issues associated with this important topic. Her note delves into some of the issues raised and identifies questions for forum participant discussion.
Read Moderator’s Thoughts, “Some Observations...”
Questions for Forum Participants
- How is uncertainty surrounding future capital regulations affecting expectations, investment, confidence?
- Do the proposed regulatory changes create disincentives for financially-sound firms to take on appropriate risk?
- How should/do firms determine the appropriate capital cushion to maintain in excess of minimum required regulatory levels?
Submit Your Comments
Acknowledging that there are many viewpoints, we encourage you to submit yours. The CFS values balanced presentation of views. Our goal is to have an active dialog on these important topics. It is our hope that the contributions will help influence the policy debate. The above questions provide ideas for topics of particular interest and relevance but comments on other related topics are also welcome. Insights and arguments can be sent to [email protected].
The CFS values your privacy. We will not share your email address or contact details.
Read How the Forum Works
For more information on bank capital guidelines please see the Federal Reserve website and the Bank of International Settlements website. For more information on the history of bank capital guidelines please refer to the Basel Committee on Banking Supervision by Charles Goodhart.
The Center for Financial Stability (CFS) is a private, nonprofit institution focusing on global finance and markets. Its research is nonpartisan. The views in this forum reflect those of the author(s) who have submitted them. They do not necessarily represent the views of the moderator, CFS, members of the Advisory Board or Trustees, whose involvement in no way should be interpreted as an endorsement of such views by either themselves or the organizations with which they are affiliated.
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Posted November 14, 2011
Basel III, Dodd-Frank, and Volcker Rule Unworkable
By John Brynjolfsson, CIO, Armored Wolf, LLC
Arguing that, “A roadmap for the future must eliminate significant private underwriting of risk within institutions that have the ability to socialize the losses,” and “Increased accountability is best done by building on the concept of transparency, private contracts, laws and courts,” this Forum contribution suggests a number of recovery priorities associated with global risk taking.
Posted November 11, 2011
Some Observations About Basel II/III
In her lead-off piece as moderator, CFS Senior Fellow and Forum Moderator Robin L. Lumsdaine provides a starting point for forum discussion by considering a number of aspects of the current debate on capital regulations and posing questions for participants.
Posted October 28, 2011
Is What's Good for MetLife Good for Us All?
In her American Banker op-ed, CFS Senior Fellow and Forum Moderator Robin L. Lumsdaine discusses how business decisions by insurance giant MetLife may be related to banking capital regulations and the resulting systemic risk.
Posted September 29, 2011
The Chattering Classes’ Deadly Cocktail
In his Globe Asia op-ed, CFS Special Counselor Steve H. Hanke argues that implementing Basel III in the middle of an economic slump would be detrimental to global growth.