Basel Blesses Basel III

In its own version of a holistic review, the Basel Committee today pronounced itself satisfied with the post-GFC regime.  Although the new construct increased complexity, Basel finds no redundancy nor any adverse effects.  Banks that were forced to raise the most capital and liquidity as a result of these reforms saw the greatest reduction in their cost of capital and, while these banks may have reduced lending, credit availability across the banking system generally increased.

FSB Advances Preliminary OEF Reforms

In its latest policy conclusions on open-end funds (OEFs), the Financial Stability Board praises its 2017 policies as a success but then goes on to describe the sector’s liquidity risk as still so high as to warrant new global standards.  The FSB and IOSCO now recommend that national regulators quickly review disclosure and stress-testing practices and improve them as briefly described in this release.  The agencies will also advance proposals for public comment that would, among other things, require OEFs either to ensure they can meet daily redemption demands or set a longer redemption period.

Daily121422.pdf