The Global Macroeconomic Costs of Raising Bank Capital Adequacy Requirements

Author/Editor:

Francis Vitek ; Scott Roger

Publication Date:

February 1, 2012

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper examines the transitional macroeconomic costs of a synchronized global increase in bank capital adequacy requirements under Basel III, as well as a capital increase covering globally systemically important banks. The analysis, using an estimated multi-country model, contributed to the work of the Macroeconomic Assessment Group analysis, especially in estimating the potential international spillovers associated with a global increase in capital requirements. The magnitude of the effects found in this analysis is relatively modest, especially if monetary policies have scope to ease in response to a widening of interest rate spreads by banks.

Series:

Working Paper No. 2012/044

Subject:

Banking Capital adequacy requirements Central bank policy rate Financial institutions Financial regulation and supervision Financial sector policy and analysis Financial services Global systemically important banks Spillovers Zero lower bound

English

Publication Date:

February 1, 2012

ISBN/ISSN:

9781463936457/1018-5941

Stock No:

WPIEA2012044

Pages:

36

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