The Global Macroeconomic Costs of Raising Bank Capital Adequacy Requirements

February 1, 2012

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Format: Chicago

Francis Vitek, and Scott Roger. The Global Macroeconomic Costs of Raising Bank Capital Adequacy Requirements, (USA: International Monetary Fund, 2012) accessed September 19, 2024

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.

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

Keywords: Bank response, Basel III, Capital, Capital adequacy requirements, Capital requirement, Capital requirements, Central bank policy rate, GDP weight, Global, Global systemically important banks, Interest rate differential, Interest rate increase, Interest rate spread, MAG mandate, MAG participant, Mexican GSIBs, Monetary policy response, Monetary policy scenario, Scenario monetary policy, Spillovers, Widening of bank lending, WP, Zero lower bound

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/044
Stock No:

WPIEA2012044
ISBN:

9781463936457
ISSN:

1018-5941

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