Capital adequacy rules are necessary but not sufficient for protecting the stability of the banking system. Critically discuss.

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Key readings  R M Lastra, Central Banking and Banking Regulation, Financial Markets Group, London School of Economics, London, 1996 (Chapter 3). 

R. Cranston, Principles of Banking Law (2nd edn., OUP 2002). Chapter 3. 

S. Valdez and P. Molyneux, An Introduction to Global Financial Markets (8th ed, Palgrave Macmillan, 2016). Chapter 6.  

 B. Allen, K. Kei Chan, A. Milne and S. Thomas, ‘Basel III: is the cure worse than the disease?’ Cass Business School, City University London, 30 September 2010.

 

Required readings 

Basel Committee on Banking Supervision, ‘Basel III leverage ratio framework and disclosure requirements’, January 2014.

 

 

 Basel Committee on Banking Supervision, ‘The Regulatory Framework: Balancing Simplicity, Risk Sensitivity and Comparability’, Discussion Paper, July 2013.

  Basel Committee on Banking Supervision, ‘Basel III: A global regulatory framework for more resilient banks and banking systems’, June 2011.

 Basel Committee on Banking Supervision, ‘Liquidity coverage ratio disclosure standards’, January 2014. 

 H. Benink, ‘On the Role of Regulatory Banking Capital’ (2008) 17(1) Financial Markets, Institutions and Instruments.

 

EU Legislation

 Basel III is transposed in EU and EEA countries through the CRD IV package composed of a Regulation (CRR) and a Directive (CRD IV). The regime is applicable as from 1/1/2014. – CRD IV Directive 2013/36/EU at  http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32013L0036:EN:NOT – CRR Regulation (EU) No 575/2013 at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32013R0575:EN:NOT – On the role of the European Banking Authority (EBA), see: http://www.eba.europa.eu/regulation-and-policy/implementing-basel-iii-europe.

 

Further suggested readings 

Carnell, Macey and Miller, The Law of Financial Institutions (5th ed., Aspen Casebook, Kluwer 2013) Chapters 1-2. 

 Lee, ‘The soft law nature of Basel III and international financial regulations’ (2014) 29(10) Journal of International Banking Law and Regulation. 

 Lee, ‘Basel III: post-financial crisis international financial regulatory reform’ (2013) 28(11) Journal of International Banking Law and Regulation. 

Demigurc-Kunt et al, ‘Bank Capital – Lessons from the Financial Crisis’ (2010) World Bank Policy Research Working Paper No. 5473, available at http://ssrn.com/abstract=1707232.  Basel Committee on Banking Supervision, ‘Report to G20 Finance Ministers and Central Bank Governors on Basel III Implementation’, October 2012 at http://www.bis.org/publ/bcbs234.pdf.

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