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Basel III and the Strengthening of Capital Requirement: The obstinacy in mistake or why “it” will happen again

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  • Bernard Vallageas

Abstract

Since the financial liberalisation of the 80's, the Basel committee on Banking Supervision wants to strengthen banks' capital and other stable funding with the purpose of increasing banks' financial security, as stable funding increases the security of the non-financial business sector. But bank capital has nothing to do with bank security and with money creation. It is shown, instead, that increasing banks' stable funding entails a decreasing of the stable funding for the rest of the economy and securitization. Thus this strengthening is harmful and the way for the financial sector to work in the interest of the economy is to separate deposit banks and other financial institutions, to strengthen banks' control and to recognize they do not need capital, and therefore no owners.

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  • Bernard Vallageas, 2013. "Basel III and the Strengthening of Capital Requirement: The obstinacy in mistake or why “it” will happen again," World Economic Review, World Economics Association, vol. 2013(2), pages 1-67, February.
    • Handle: RePEc:wea:worler:v:2013:y:2013:i:2:p:67
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    File URL: http://wer.worldeconomicsassociation.org/files/WEA-WER2-Vallageas.pdf
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    References listed on IDEAS

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    1. L. Randall Wray, 2006. "Can Basel II Enhance Financial Stability?: A Pessimistic View," Economics Public Policy Brief Archive ppb_84, Levy Economics Institute.
    2. Vallageas, Bernard, 2009. "Analyse de la crise financière actuelle Où vont-ils chercher ces milliards qu’ils n’ont pas? Comment l’État assureur en dernier ressort permet d’accéder à la Banque centrale européenne, prêteur en der," MPRA Paper 59236, University Library of Munich, Germany.
    3. Wicksell, Knut, 1907. "The Influence of the Rate of Interest on Prices," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 17, pages 213-220.
    4. Richard A. Werner, 2005. "New Paradigm in Macroeconomics," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-50607-7, March.
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    1. Massimo Cingolani, 2013. "Finance Capitalism: A Look at the European Financial Accounts," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(3), pages 249-290, May.

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