Annals of the University of Oradea: Economic Science (Jul 2013)
THE NEED TO REFORM THE BANKING SYSTEM – A PREMISE FOR THE IMPLEMENTATION OF THE BASEL III ACCORD
Abstract
The application of banking reform measures represents a real challenge for banks in this post-crisis period also leading to the rapid implementation of the Basel III Accord. The causes of financial-economic crisis must be identified and dealt with, one of the difficulties the banks face being that to quantify and take risks. The banking system was characterized by weaknesses in the recent global financial crisis. These weaknesses were related to: too much leverage in the banking; not enough high quality capital to absorb losses and an excessive credit growth based on underwriting standards and under-pricing of liquidity. It is felt the need to move from ”deregulation” to an accurate banking regulation process, based on an appropriate mix of macroeconomic policies, that is to the ensurance of a balance between the policies meant to stimulate the demand and those policies which can stimulate the demand. The problem of banking regulation is also taking into account the reactions of the business world which emphasizes the fact that an exaggerated regulating process which supresses innovation would be a major risk. Many of the changes in the banking system are inspired by the final draft of the G-20 reunion, that of developed countries, in November 2008, a draft considering the economic re-launch and reform. Basel III considers the reform of the banking system by measures whose cover area is much larger and they refer to both the micro-prudential framework and to the macro-prudential one. The application of all the measures established by Basel III Accord is expected to end by 2019, with different effects in the main segments of banking business: retail, corporate and investment banking. The impact of Basel III implementation in the banking system of the USA is almost similar to that of Europe’s, with slight differences regarding the capital and the reduction of mortgage rights, which play a more important role in the USA, the latter having another starting economic point than Europe.
