Basel 3 and its impact on liquidity measures

Bachelor Thesis from the year 2011 in the subject Business economics - Investment and Finance grade: 1 University of Innsbruck (Banken und Finanzen) language: English abstract: 1. IntroductionOn 6 September 2009 the Central Bank Governors and Heads of Supervision agreed on Basel III after the financial crisis proved that Basel II was not capable of preventing the global economy from such a crisis (BCBS 2008). Basel III is the third version of the international regulatory framework for financial institutions published by the Basel Committee of Banking Supervision (BCBS) of the Bank for International Settlements (BIS) located in Basel Switzerland (BIS www.bis.org 30.04.2011).... ....This bachelor thesis should provide some deeper information about the impacts of the new liquidity measures. The impact of the standards on economy financial institutions and their business segments is presented after a detailed explanation of them. Concluding a comprehensive evaluation of the new requirements is done.2. Developments in Basel III2.1. Increasing Capital Requirements2.2. Liquidity Coverage Ratio2.3. Net Stable Funding Ratio2.4. Monitoring Tools and Application of Standards3. Initial Situation of Banks Regarding Liquidity Requirements3.1. Quantitative Impact Study of the BCBS3.2. European Quantitative Impact Study of the CEBS3.3. Comparison of Results4. Economic Impacts of the New Liquidity Requirements4.1. Benefits of the New Liquidity Requirements4.2. Costs of the New Liquidity Requirements4.3. Evaluation of the Results5. Impact of the Liquidity Requirements on Banks and their Business Segments5.1. Changed Market Conditions5.2. Impact on the Profitability of Banks5.3. Impact on Business Segments5.4. Impact on Central Banks5.5. Overall Impacts on Banks and Business Segments6. Evaluating the Liquidity Rules of Basel III6.1. Static Nature of the Liquidity Measures6.2. Are Wrong Incentives the Actual Causer?6.3. Introduction of Basel III