[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]
The latest Basel proposals for the banking sector require far more capital to be raised -- well in excess of the capital already raised in response to The Great Unwind and The Great Reset. This is not going down well with the financial markets in parallel with the Volcker Rule. The Basel Committee's thoughts on capital and liquidity have many far reaching and critical implications for the entire global banking system and could be in force within a few years. Bank for International Settlements, Basel, Switzerland
Under proposals from the Basel Committee -– which have been dubbed 'Basel III' –- banks will have to maintain a so-called core capital ratio of at least 6%. For many banks, capitalisation under Basel II is deemed very weak. Transition rules would give them time to fix the situation, but not a reprieve from the need to raise more equity. Overall, this could be particularly negative for the European banks. The European banking sector as a whole will have an aggregate extra funding requirement of more than one trillion euros, nearly one and a half trillion dollars, to comply with Basel III according to a number of projections from major financial institutions. The American banks' requirements are a lot less. Under changes to the Basel capital directive designed to improve the capital strength of big banks that have collectively lost hundreds of billions in the past few years, small to medium size brokers may also have to put aside a larger proportion of their turnover as a risk-capital buffer.
European and American banks currently utilise either Basel I or Basel II. Those regulatory frameworks represent a colossal, decades-long effort at honing and perfection, with minimum capital requirements