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Money in a time of choleric Basel blows the bubbles

Money in a time of choleric Basel blows the bubbles The current issue and full text archive of this journal is available at www.emeraldinsight.com/1526-5943.htm JRF COMMENTARY 12,4 Money in a time of choleric: Basel blows the bubbles Michael Mainelli Z/Yen Group Limited, London, UK The Basel Committee on Banking Supervision, formed in 1974 by the Bank for International Settlements, issues the international standards (“accords”) for banking laws and regulations. To understand, evaluate and implement regulation properly, one must know the purpose of the regulation. Basel’s primary purpose has changed over the years, a point upon which we shall expand in a moment. Unusually for this column, rather than a lengthy critique, we provide a short observation. In a time of anger over banking and finance, time and again observers return to the fact that money supply growth exceeded economic growth over the past two decades, thus leading to asset bubbles, albeit compounded by market structure and regulatory failures. This column wants to point out that those risks may now be worse. Bubble regulation may have migrated to Basel, and yet the Basel Committee may not realise they now set the limits for the global money supply. How can this be? Basel I published a set of minimum capital requirements http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Risk Finance Emerald Publishing

Money in a time of choleric Basel blows the bubbles

The Journal of Risk Finance , Volume 12 (4): 3 – Aug 16, 2011

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1526-5943
DOI
10.1108/15265941111158523
Publisher site
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Abstract

The current issue and full text archive of this journal is available at www.emeraldinsight.com/1526-5943.htm JRF COMMENTARY 12,4 Money in a time of choleric: Basel blows the bubbles Michael Mainelli Z/Yen Group Limited, London, UK The Basel Committee on Banking Supervision, formed in 1974 by the Bank for International Settlements, issues the international standards (“accords”) for banking laws and regulations. To understand, evaluate and implement regulation properly, one must know the purpose of the regulation. Basel’s primary purpose has changed over the years, a point upon which we shall expand in a moment. Unusually for this column, rather than a lengthy critique, we provide a short observation. In a time of anger over banking and finance, time and again observers return to the fact that money supply growth exceeded economic growth over the past two decades, thus leading to asset bubbles, albeit compounded by market structure and regulatory failures. This column wants to point out that those risks may now be worse. Bubble regulation may have migrated to Basel, and yet the Basel Committee may not realise they now set the limits for the global money supply. How can this be? Basel I published a set of minimum capital requirements

Journal

The Journal of Risk FinanceEmerald Publishing

Published: Aug 16, 2011

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