Basel III as a Global Standard of Banking Regulation - Essay Example

The paper "Basel III as a Global Standard of Banking Regulation" is an excellent example of an essay on finance and accounting. Basel III is the result of the global financial crisis happened in 2008, where it gives a chance to a basic reformation of the risk and regulation perspective within the international financial market. In this regard, the BCBS (Basel Committee on Banking Supervision) has cooperatively developed a new framework in order to reinforce the liquidity and capital regulations internationally for endorsing a robust baking industry, named as Basel III (Greenley, Kelly, Forgarty, & Dutta, 2011). It initiated a conceptual alteration in the liquidity and capital principles. It has become the requirement of firms that are competing on a global basis, and are exposed to the financial and regulatory risks seen in the financial crisis of 2008. However, this framework provides a solution to many issues existing in the contemporary banking industry, but still, it raises some implementation concerns that are significant for its application. 

Among these concerns, the most important issue is its regulatory effect, where many economies face issues in obtaining the adequate level of liquid assets in the money market for complying with the new conditions, such as in South Africa. Another problem is regarding the calibration of the news agenda, as the banks have obtained assistance from the government during the financial crisis, so it would be insufficient for depending only on the bank’s information (Willink, 2011). In addition, the central bank’s role should also be taken into the account, as this bank can generate liquidity conditions any time, so the requirement of securing extra liquidity would be an injustice for banks. It would result in inadvertent outcomes. This implementation would also affect the central bank’s role in applying the monetary policy. Moreover, such new liquidity regulations would be difficult to apply because of spending short time finance for liquidity in banks (Bech & Keister, 2012 ). Thus, it is of high significance to manage and apply the Basel III wisely for circumventing supervisory arbitrage and other issues.  Read More