Thursday, January 17, 2013

BoE's Robert Jenkins: Basel rules not up to the job

Reuters reports that Bank of England Financial Policy Committee member Robert Jenkins said that the Basel capital and liquidity requirements were not up to the job of protecting taxpayers.

Mr. Jenkins is simply confirming that the combination of complex rules and regulatory oversight doesn't work and is a wholly inadequate substitute for the combination of transparency and market discipline.

New global rules forcing banks to hold more capital and cash to shield taxpayers and make the financial system safer won't achieve their aim, a UK regulatory policymaker warned on Thursday. 
Robert Jenkins, a member of the Bank of England's Financial Policy Committee, said the Basel III accord, agreed by world leaders (G20) for implementation over six years from this month, does not go far enough. 
Basel III requires banks to more than triple the amount of capital they hold and have separate cash buffers so taxpayers are less likely to have to rescue them again should another financial crisis occur. 
"Will Basel III do the job? My personal opinion is that it won't," Jenkins told reporters. 
He said his view was echoed by a growing body of academics and others on the FPC such as Andrew Haldane, the Bank's director of financial stability. 
Haldane and other regulators such as Thomas Hoenig, vice-chairman of the U.S. Federal Deposit Insurance Corp, think the Basel accord is too complicated to work.

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