Basel Committee's new liquidity ratios causing a stir

Unintended consequences are almost inevitable when weighty new regulations come into force, even if those rules are enacted with the best of intentions and seem sensible. The risk increases when regulators act quickly, succumb to political imperatives, or act unilaterally.

On the face of it, the new liquidity ratios proposed by the Basel Committee on Banking Supervision seem rational. A major problem during the crisis was banks’ inability to roll-over short-term financing as investor confidence