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Review On The Basel New Capital Accord Under The Financial Crisis

Posted on:2011-07-09Degree:MasterType:Thesis
Country:ChinaCandidate:L B JiangFull Text:PDF
GTID:2166360305973098Subject:International Law
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The financial crisis triggered by the sub-prime mortgage crisis has brought a great loss to the international financial industry and exposed the flaw of financial supervision fully. Many country leaders have achieved a series of recognitions to deal with the financial crisis. we can see that strengthening the reform of financial supervision to be imminent in the latter crisis time from London finance summit, the Pittsburgh finance summit in 2009 and the Davos forum in 2010. Many banks have implemented the New Capital Accord that represented advanced managerial experience of active banks in the world not to be able to achieve in the crisis. They still experienced the difficulty. Therefore, many people start to call the rationality and validity of the New Capital Accord into question which was synchronization with breakout of the sub-prime mortgage crisis and started nearly implemented in the main economy and has led to a debate on whether the New Capital Accord has been alleviating or deteriorating the crisis in crisis period and stabilizing bank system. Thus it causes the New Capital Accord to be pushed to once more the keenest struggle in the latter crisis time and people pay attention to it again.At present bank industry uses the supervision system of "the two-track multi-thread" in America. It has a lot of intrinsic limitations of supervision blanks and the financial supervision has many flaws which exposed in this financial crisis in America.Those explained that it was inevitable to breakout for the financial crisis. The US should have implemented the New Capital Accord comprehensively at the end of 2006, but consideration the benefits of the numerous small banks, so the implemention time table of the New Capital Accord was retarded until 2009 finally. Before breakout of the financial crisis, in fact, the New Capital Accord has not implemented completely in the US. From this, this article thinks it is important to cause flaws in financial supervision in American that the New Capital Accord has not been implemented effectively in America. the New Capital Accord introduced sophistication and forward-looking actions which further enhanced the risk sensitivity of the supervision capital on the foundation of the Old Capital Accord in 1988. This article shows that the New Capital Accord has rationality through analyzing the role of the US Commercial bank which acts in the financial crisis. Therefore, this financial crisis had not only proven that the New Capital Accord has the rationality, but highlighted that it is very importance to implement the New Capital Accord as soon as possible. However, the New Capital Accord is also exposed many flaws in the financial crisis, such as lacking the effective stipulation of excessive leverage in the banking system, liquidity risk management, the risks of systemically important bank, reducing the New Capital Accord to rely on the exterior credit rating organization excessively, less procyclical than the current "incurred loss" provisioning model and so on in the New Capital Accord. To a certain extent, it deepened the spread of this crisis. In order to solve the flaws in the New Capital Accord which exposed in the financial crisis, the Basel Committee has carried on a series of revisions and releaed many guidance documents to the New Capital Accord.According some flaws in the New Capital Accord exposed in the financial crisis and recent amendments introduced by the Basel Committee to the New Capital Accord, This article proposes experimentally some consummational suggestions further to the New Capital Accord:In introducing a leverage ratio to contain the build-up of excessive leverage in the banking system aspect, it should put investment bank, flush financial organs and fund table the project outside the bank asset debt table into the leverage supervision scope;In further strengthening liquidity risk management aspect, it should list some high qualitily assets explicitly and determine a lowest proportion of accounting for the high qualitily assets. Moreover, it must introduce the corresponding restraintional mechanism; In reduceing The New Capital Accord to depend on the exterior credit rating organization excessively aspect, on the one hand, it should relax the bank to use the condition of the internal credit risks model and drove that the bank to use internal Ratings-Based Approach more. On the other hand, it should establish further action standards of exterior credit rating organization and so on. Finally, this article point out some banks exist some questions of supervision at present in China because our credit grows excessively and proposes some briefs policy suggestions on the future implementation of the New Capital Accord in China.
Keywords/Search Tags:financial crisis, the New Capital Accord, bank supervision
PDF Full Text Request
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