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Basel 2: the risk to the global consensus

Basel 2: the risk to the global consensus Basel 2 has been the subject of intense debate amongst bankers around the world. It will replace the original Basel Accord of 1988, but unlike the latter it looks as if the new Accord will undermine the global consensus. It is a costly exercise and the heightened risk of regulatory arbitrage may yet distort the competitive landscape. In particular, the completely different ways in which Basel 2 will be implemented in the USA and EU pose a challenge for institutions that operate on a global scale. This article is a brief examination of the key differences and challenges posed by the draft Accord – the prospects for a “final” draft being truly final seem remote and Basel 3 may well have to be on the agenda before the ink is dry on Basel 2. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Balance Sheet Emerald Publishing

Basel 2: the risk to the global consensus

Balance Sheet , Volume 12 (1): 5 – Feb 1, 2004

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Publisher
Emerald Publishing
Copyright
Copyright © 2004 Emerald Group Publishing Limited. All rights reserved.
ISSN
0965-7967
DOI
10.1108/09657960410514643
Publisher site
See Article on Publisher Site

Abstract

Basel 2 has been the subject of intense debate amongst bankers around the world. It will replace the original Basel Accord of 1988, but unlike the latter it looks as if the new Accord will undermine the global consensus. It is a costly exercise and the heightened risk of regulatory arbitrage may yet distort the competitive landscape. In particular, the completely different ways in which Basel 2 will be implemented in the USA and EU pose a challenge for institutions that operate on a global scale. This article is a brief examination of the key differences and challenges posed by the draft Accord – the prospects for a “final” draft being truly final seem remote and Basel 3 may well have to be on the agenda before the ink is dry on Basel 2.

Journal

Balance SheetEmerald Publishing

Published: Feb 1, 2004

Keywords: Risk management; Banking; USA; Europe; Regulation

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