The Impact of the New Regulatory Framework

Francesco Cannata and Ulrich Krueger

This article was first published as a chapter in Basel III and Beyond, by Risk Books.

13.1 Introduction

The definition of the Basel III framework has been accompanied by a wide range of economic analyses aimed at assessing the likely effects of the new rules on banks and the economy as a whole. On the one hand, impact assessment is a working tool that is widely used in regulatory processes, not limited to the financial sector. On the other hand, the fact that the introduction of the new prudential rules followed the most severe economic crisis since 1929 has made such analyses crucial from a policy point of view.

This chapter aims at providing an overview of the main results of these analyses, highlighting the key aspects as well as the more controversial issues. The text is organised as follows. Section 13.2 discusses the role of impact assessment in the Basel III regulatory process. Section 13.3 summarises the results of the Comprehensive Quantitative Impact Study (C-QIS) for international banks, following the same methodology and presentation adopted by the Basel Committee and the Committee of European Banking Supervisors (CEBS – now the European Banking Authority – EBA);