Basel iii Compliance Professionals Association (BiiiCPA)www.basel-iii-association.com
Basel iii Compliance Professionals Association (BiiiCPA)
1200 G Street NW Suite 800 Washington, DC 20005-6705 USA Tel: 202-449-9750 Web: www.basel-iii-association.com
Basel III: A global regulatory framework for more resilientbanks and banking systemsDecember 2010, Bank for International SettlementsImportant Sections
A strong and resilient banking system is the foundation for sustainableeconomic growth, as banks are at the centre of the credit intermediationprocess between savers and investors.Moreover, banks provide critical services to consumers, small andmedium-sized enterprises, large corporate firms and governments whorely on them to conduct their daily business, both at a domestic andinternational level.One of the main reasons the economic and financial crisis, which beganin 2007, became so severe was that the banking sectors of many countrieshad built upexcessive on- and off-balance sheet leverage.This was accompanied by a gradual erosion of the level and quality of thecapital base. At the same time, many banks were holding insufficientliquidity buffers.The banking system therefore wasnot able to absorb the resultingsystemic trading and credit lossesnor could it cope with thereintermediation of large off-balance sheet exposures that had built up intheshadow banking system.The crisis was further amplified by aprocyclical deleveraging processandby theinterconnectedness of systemic institutions through an array of complex transactions.