October 15, 2010

Basel regulations are also bad for developed submerging countries.

Sir, Michael Taylor holds that “Basel III is bad news for emerging economies” October 15. He is right and I have been arguing so for years at the World Bank at UN and in many other places, since Basel I and II already contained plenty of bad news.

But what we more recently found out was that these regulations were equally bad for developed countries and which, because of them, have now been converted in submerging countries.

Any bank regulation that penalizes risk-taking so much as to force banks to finance only what is perceived ex-ante as having a low risk of default, belongs only to societies who have called it quits.