Basel III is not as simple as it seems

BASEL III

The Basel Agreement on banks has been hailed by its supporters as a guarantee we will not have another credit crunch.

Once the new proposals have been worked out and implemented, banks, they say, will have enough capital to get them through difficult times, even times as difficult as 2008. Nothing is a simple as that. The full measures will only be implemented by 2018, so there are years ahead when some banks may not meet the new Basel capital requirements. The Basel plan requires banks to hold more cash and capital, and favours holding cash in the form of government bonds. This may not be such a good idea in weak and over-borrowed countries, where the government debt itself is being questioned. T...