Basel III, Qualitative Challenges: New Standard Ratios, Higher Capital and Higher Risk Weights

Abstract

The historical indications of banking crises refers that any violation of this equation would lead to the signs of the emergence of a banking crisis, the international bodies and organizations in this regard, in an attempt to set a number of criteria from it would be a safety valve for banks in the performance of their lending activity. In this context, the decisions of Basel 1 appeared, followed by the decisions of Basel 2, as an attempt to complete the deficiencies in Basel 1. However, despite the importance of what these decisions came with, they were not sufficient to prevent the occurrence of the 2008 financial crisis, which was a strong motive. For the emergence of Basel 3 decisions which tried to set conditions and standards that many consider strict to the extent that it may hinder the activity of banks in itself, as it requires the availability of a timetable for their implementation.