If you believe the central bankers and regulators from the G20 countries who make up the Basel committee, now in conclave working out the final details of Basel III, it will be a prudent but well-judged package which judiciously balances conflicting objectives. The committee accepts that its main stipulation, requiring banks to hold higher reserves, will have some economic impact. The cost of credit may be a little higher, so there will be somewhat less investment, and therefore a reduction in economic growth. But it expects that reduction to be less than half a per cent over five years.
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