What Are The Main Features Of The Basel Iii And How Do They Differ From Basel Ii

Introduction The member states of the Group of twenty (G20) in 2010 certified Basel III framework which aimed at increasing the quality and quantity of capital that banks should have. Basel III replaced Basel I and II after they seemed to be collapsing under the pressure of the financial crisis in various countries (Gromova-Schneider Niziolek 2011).Advertising We will write a custom essay sample on What Are The Main Features Of The Basel Iii And How Do They Differ From Basel Ii specifically for you for only $16.05 $11/page Learn More Regulatory institutions are given the authority to have a large-scale-prudential approach in ensuring that Basel III re-establishes better quality liquidity and capital (Lyngen 2012). The purpose of this paper is to examine the key features of Basel III and how it varies from Basel II. Features of Basel III This section focuses on the main features of Basel III and their components which the committee has put forward to ena ble financial institutions to combat the financial crisis. The first feature is concerned with increasing the quality and quantity of capital (Walker 2011). Three stages will be used to advance the value, precision as well as the stability of Capital bases. The first stage involves efforts to stabilise ordinary shares in addition to increasing common shares and the earnings that are retained. The second stage involves harmonising capital instruments and the final tier is concerned with eliminating capital. The second feature is the establishment of additional buffers (Walker 2011).The committee proposes the following approaches to be used to reinforce the coverage of any threats to bank assets, counterparty credit risk and management of market integration. Lastly, capital requirements for counterparty must be reinforced in addition to raising the capital buffer that supports this coverage. The third feature of Basel III is the introduction of Leverage ratio as an added appraisal of Basel II risk based structures. The leverage ration is intended to establish a base to build up leverage in the banking industry, increase efforts to strengthen against model risk. And inaccurate measurement by supplementing the risk based measure with a simplified standard founded on gross exposures (Lyngen 2012). The Fourth feature is managing Counterparty risks by promoting countercyclical buffers. This is also proposed in Basel III as a strategy to advance the build up of capital buffers in appropriate periods which can be relied upon during periods of crisis.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Countercyclical would be advanced through the following means reducing surplus cyclicality of the least amount of capital prerequisite as well as advancing provisions that aim at capital stability in the future (Gromova-Schneider Niziolek 2011). The fourth element is also concerned with efforts to amass a vast amount of information and data over time which can be of help in determining the likelihood of defaulting as had been envisaged in Basel II. The banking industry must also provide support to banks to carry out stress tests so that they develop proper mechanisms to address crises. The Fifth feature involves improving liquidity. Here, the committee has advanced a world wide approach for internationally active banks to achieve the least standard of liquidity (Delahaye 2011). The committee held that banks internationally will be able to borrow more during periods of stress and crises. The Sixth feature deals with the SIFIs or the too big to fail institutions. The committee recognises the fact that these institutions are a threat to other banks in the banking industry (Walker 2011). As a result of this realisation, the committee links with the financial stability board which was also established by G20 to advance several strategies that can be used to address issues in the SIFIs. Such approaches include tighter large exposure restrictions, mandatory recovery and resolution plans. All these features are to be considered during the implementation of Basel III. The differences between Basel III and Basel II The main difference between Basel II and Basel III is the increase in the capital buffer by setting up the minimum quality and quantity of Capital which internationally active banks must have in their possession (Danila 2012). This is evident in the features discussed above since, they all intend to address the issue of ensuring that banks are stable and can survive during periods of stress or financial crises. Basel III expands on the explanations of fliers and provides a clear understanding of capital as an asset to guard against unforeseeable future conditions.Therefore, Basel III adopts these strategies and emphasises on them through the features discussed above to ensure banks have a sustained growth even during times of crises.Adv ertising We will write a custom essay sample on What Are The Main Features Of The Basel Iii And How Do They Differ From Basel Ii specifically for you for only $16.05 $11/page Learn More Conclusion Basel III is a framework that was developed to put in operation the components of Basel II in addition to helping banks expand the base for sustainability in the banking industry. This is a relevant step since banks have suffered in times of crises and such effects are always transferred to customers. Customers may move to more secure banks and this may have greater impact on the survival of the banks they leave. It is therefore appropriate for a framework to be developed to aid such banks against collapsing specifically during times of stress. This is what Basel III intends to do. References Danila, O 2012, ‘Impact and Limitations Deriving from Basel II within the Context of the Current Financial Crisis’, Theoretical Applied Economics, Little, B rown and Company, NY. Delahaye, B. P 2011, Basel III: Capital Adequacy and Liquidity After The Financial Crisis / Bernd P. Delahaye, World Scientific, London. Gromova-Schneider, A, Niziolek, C 2011, ‘The Road to Basel III — Quantitative Impact Study, the Basel III Framework and Implementation in the EU’, Financial Stability Report (Oesterreichische Nationalbank), Cengage Learning, UK. Lyngen, N 2012 ‘Basel III: Dynamics of State Implementation’, Harvard International Law Journal, vol. 53, pp 519. Web. Walker, G.A 2011, ‘Basel III market and regulatory compromise’, Banking Regulation, vol. 20 no. 1, pp. 53-69.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More This essay on What Are The Main Features Of The Basel Iii And How Do They Differ From Basel Ii was written and submitted by user Deborah Vega to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Pub Scene Analysis essays

Pub Scene Analysis essays Every director has his or her own little techniques or ways of hinting the audience about the certain characters in their movies. Ron Howard does a tremendous job of revealing John Nashs abnormal talent for seeing patterns, equations, and even coming up with new theories. In the most important scene in the movie, I believe, Howard puts all the pieces together perfectly to explain Nashs Nobel Prize winning Game Theory. The scene takes place in a musty old pub. Light from the lamps hanging above each table and an eerie cigarette smoke fill the air. The tables are dark brown, old looking, and look like they have been around for a while. Surrounding the tables are red vinyl chairs that have no arms, but have backs that reach the upper back. There is an old fashioned jukebox in the background and pinball machine as well. A pool table is situated in the back of the room; it is surrounding by a bunch of guys that are playing a game of pool at the time. It starts off with five women, around their twenties, enter the cluttered pub. Among the ladies is a beautiful blonde bombshell. She immediately stands out from the others and all eyes in the pub are suddenly glued to her, especially the eyes of Nash and his four buddies. We now see Nash at a table doing work and his buddies quickly surrounding him to join in staring and commenting on the blonde. Nash then stops his work and goes into a deep stare toward the blonde, but once she looks back at him he get embarrassed and nudges his head down. Nashs four buddies fill the table with their beer bottles and empty cups of scotch. This creates a very cluttered shot because the table isnt big enough for all five men to begin with. There is also a ton of Nashs work spread all over the table as well. The four buddies start a conversation about who will get the blonde and Adam Smiths economic theory is incorporated with the little competition....

Should the UK government return to a policy of full state financing of Essay

Should the UK government return to a policy of full state financing of student - Essay Example In recent years, education, specifically higher education, stood as one of the most contentious topics of discussion in public policy forums and government policymaking in the UK. As witnessed, several academic changes have been instigated, others have remained pending, and in some quarters, significant reform packages have been put forward, on the drawing board ready for deliberations or are presently being deliberated upon. In the UK and in other countries of the world, higher education is confronted with three problems - universities are inadequately funded, escalating apprehensions about quality, the dearth of student support, proportion of students coming from underprivileged environments is deplorably insignificant and the financing of universities is in the state of collapse since money is sourced from general taxation, however, the beneficiaries are those coming from more affluent conditions (Barr, 2003, p.371). The plan to restructure higher education (HE) funding has caused so much controversy. Much of the wrangling has been centered on what the reforms will mean for those students coming from different family income backgrounds and the level of liabilities they will shoulder in their higher education experience. Likewise, apprehensions have been brought up on how the graduates will be affected by these debt repayments all through their working lives, as well as whether or not the funds raised will significantly improve the condition and circumstances of universities (Dearden, Fitzsimons & Goodman, 2004, p. 5) Brief Statistics At present, there are 168 higher education institutions in the UK, of which 90 are universities. In the years 2002-2003, enrollees reached up to 2.2 million in UK universities and colleges. In England, the participation rate for 18-30 year olds in higher education was 44%. In the same period, there were 184,700 international students studying in the UK, as well as 90,600 from the EU. Universities employ more than 300,000 staff; 1.8% of the total UK labour force. UK's higher education generates an annual 4 billion in foreign earnings and education and training exports are worth 10.2 billion. Public funding of higher education per student dropped by 37% between 1989 and 2002. During the same period student numbers grew by 94%. Source: Universities UK, Manifesto, General Election, 2005 A Quick Look at the Proposals January 27, 2004 saw the endorsement of the Higher Education Bill by the MPs which aimed to eradicate tuition fees for students and institute variable fees of up to 3,000/year from years 2006-07. In this plan, graduates will be allowed a sponsored Graduate Contribution Scheme or GCS loan equal to the value of their fees. Likewise, graduates from 2009 will put in 9% of earnings over and above 13,925 every year to pay off the loan. In line with inflation, the outstanding value of the loan will expectedly increase each year, with any amount left unsettled after twenty-five years being cancelled. Another scheme calls for students of underprivileged backgrounds to receive financial support of at least 300/year if full top-up fees will be charged by the institution. With the most recent proposals, students