BASEL III – Responses to Consultative Documents, Vital Aspects ofudthe Consultative Processes and the Journey Culminating in theudPresent Framework

摘要

This paper is aimed at providing a comprehensive overview of, and responses to, four very vitaludcomponents of the consultative processes which have contributed to the new framework known asudBasel III. The paper will approach these components in the order of the consultative processes,udnamely, the capital proposals, the liquidity proposals and the Proposal to ensure the loss absorbencyudof regulatory capital at the point of non-viability. The capital proposals comprise proposals aimed atudstrengthening the resilience of the banking sector, the proposal relating to international frameworkudfor liquidity risk measurement, standards and monitoring and, the countercyclical capital bufferudproposal.udWhilst the capital proposals have been welcomed, there has been growing realisation since theudaftermath of the recent Financial Crises that banks which have been complying with capitaludadequacy requirements could still face severe liquidity problems.udAs well as highlighting the importance of introducing counter cyclical capital buffers, the responseudto the countercyclical proposal draws attention to the need for greater focus on more forwardudlooking provisions, as well as provisions which are aimed at addressing losses and unforeseenudproblems attributed to “maturity transformation of short-term deposits into long term loans.”udThe Basel Committee’s consultative document on the “Proposal to Ensure the Loss Absorbency ofudRegulatory Capital at the Point of Non Viability” sets out a proposal aimed at “enhancing the entryudcriteria of regulatory capital to ensure that all regulatory capital instruments issued by banks areudcapable of absorbing losses in the event that a bank is unable to support itself in the private market.”udAmongst other issues addressed, the response to the consultative document highlights why theudcontrolled winding down procedure also constitutes a means whereby losses could still be absorbedudin the event that a bank is unable to support itself in the private market.