Making Basel III work for emerging markets (VoxEU)

By Thorsten Beck and Liliana Rojas-Suarez

From the article:

The 2008 crisis originated in the financial systems of advanced countries and, not surprisingly, one of the important responses to prevent another credit crunch – the Basel III international standards – focused primarily on the stability needs of these countries. A detailed and wide-ranging set of measures developed by a forum of bank regulators, representing mainly the G20 nations, Basel III aims to strengthen the regulation, supervision and risk management of large banks around the world (BCBS 2017). While it is calibrated primarily for advanced countries, many emerging market countries are in the process of adopting and adapting to these rules, and many others are considering it (Hohl et al. 2018).

A recent report from the Center for Global Development (Beck and Rojas-Suarez 2019) assesses the implications of Basel III for emerging markets and developing economies (EMDEs) and provides recommendations for both international and local policymakers to make Basel III work for these economies. It is the outcome of intensive discussions among a task force of current and former senior central bank officials from EMDEs, led by the two of us. 

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