Basel faulty
Having been broadly supportive of global bank capital standards over the past 25 years, David Rowe explains why the latest iteration of the framework has changed his stance
Since the mid-1980s, when I left economic forecasting in favour of financial risk management, I have voiced specific criticisms about the details of the Basel capital accord, which was first agreed in 1988 and has now reached its third iteration, Basel III. I felt the Basel Committee on Banking Supervision was remarkably late to the party in using dynamic simulation methods to evaluate counterparty credit exposure – a policy change that appeared in Basel II in 2005.1 I also agreed with the view
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