Just a quick note to welcome the (sort of) full implementation of Basel II in Australia – and its full implementation in most other jurisdictions (apart from, of course, the USA).
I say sort of in Australia as a few banks are staying on Basel I for some things, not others. The usual sort of “phased implementation” (AKA foul-up) you often get with major changes like this. Anyway, welcome Basel II.
The sideline on liquidity risk is to note that the one area that has caused the recent problems has been liquidity, not a lack of capital or other problems. Liquidity is the one area that is not really covered by international standards, with all differing regulators following different mechanisms (as noted below). The next project of the BCBS really should be to establish some standards in this area, and it looks like (thanks GRR) this is underway. While not a great fan of regulation, common standards I always believe to be useful, so perhaps some principles-based standards would be a very useful thing here.
Anyway, happy new year. My wishes for this year are:
- May we get better risk management from our banks;
- Less regulation from the regulators; and
- More principles-based standards to follow.
I also believe porcine aviation will make great leaps this year. If you have any similar wishes, feel free to add them in.