BASEL III - THE STABILITY OF FINANCIAL SYSTEM

Cornelia Marin

Revista Economica, 2012, vol. Supplement, issue 4, 413-419

Abstract: The purpose of Basel III is to reduce the ability of banks to damage the economy by taking on excess risk. It fixes many of the shortcomings of micro-level supervision, but it also incorporates the broader system wide lessons and introduces a macroprudential overlay to the regulatory framework. Taken together, these measures should make the system more stable over the long run, thus raising economic growth over the cycle. The purpose of this paper is to analyze how European banks will respond to Basel III, respectively, the impact upon the Romanian banking system. If at European level it is estimated a substantial deficit in capital and liquidity, with major impact on profitability indicators, the impact of Basel III upon banking in Romania is considered to be limited. The current financial crisis has shown us that the role of central banks in this relationship is crucial in order to avoid economic imbalances and achieve high levels of economic activity.

Date: 2012
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