Kasi-Blog

Today, I had to give a presentation about the Basel System. Due to recent events, I discussed the origins of the subprime crisis and how is it related to a certain deficiency in Basel II. I explained how the cooperation of Central Banks to regulate Banking Supervision was a result of banking failures in the 70ies and 80ies which speculated heavily in the currency markets.

I showed how Basel I introduced risk-weighted minimal capital requirements to have a global standard for assessing the risks banks were taking in the increasingly global financial markets. Prof. Kuczynski explained how Basel I indirectly brought about the Asian crisis because Interbank-Lending was given zero risk weight despite considerable real risks taken by some of the Asian commercial banks. I also brought forward the argument (raised here) that Basel II made banks rely too much on rated securities which made them fall into the subprime trap.

The handout from my presentation can be downloaded here.

This entry was posted on Freitag, Januar 25th, 2008 at 00:38 and is filed under kasinomics. Tags: cambridge, crisis, economics, financial markets, Lectures of Karsten Wenzlaff, subprime crisis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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