The New Capital Adequacy Framework - Institutional Constraints and Incentive Structures

Cem Karacadag and Michael Taylor

No 8 in SUERF Studies from SUERF - The European Money and Finance Forum, currently edited by Natacha Valla

Abstract: This paper considers the implementation challenges facing the Basel Committee's new proposals on bank capital standards. When compared with the existing Capital Accord, the proposals represent a shift across two intersecting dimensions-regulatory versus economic capital, and rules-based versus process-oriented regulation. On minimum capital standards, the case for using external ratings may be stronger than has been recognized, given the divergences in the purpose and design of internal ratings. On supervisory review, ensuring comparability among supervisors and building supervisory capacity will present serious challenges. On enhancing market discipline, incentives for markets to exercise discipline will be required.

Keywords: Capital regulation; Bank capital; Rating agencies; Prudential supervision (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2000
ISBN: 978-3-902109-00-2
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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