Basel III, Clubs and Eurozone Asymmetries

29 Pages Posted: 5 Sep 2014

See all articles by Michele U. Fratianni

Michele U. Fratianni

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy; Universita' Politecnica delle Marche

John C. Pattison

Canadian Imperial Bank of Commerce

Date Written: August 15, 2014

Abstract

Financial regulation has shifted from a system managed as an oligopoly dominated by the G2/G5 to expanded club membership like the Basel Committee for Banking Supervision (BCBS). Expansive clubs have to agree to terms that are closer to the preferences of soft-regulation members. Yet, once a global agreement on minimum standards, such as Basel III, is reached, the implementation is left to national or regional regulators. Deviations from the Basel III standards are bound to occur; the complexity of the agreement will facilitate an asymmetric implementation of national regulation and supervision. On the high side, countries like the US, UK, Australia, some Scandinavian countries and Canada have chosen higher standards. On the low side, we expect deviations to take place in those member countries of the Eurozone that are heterogeneous, have different preferences and tradeoffs between regulatory stringency and economic activity. The requirements of both global clubs and the EU regional club for transparency, monitoring and a level playing field will cause a collision between the interests of the clubs and their members, threatening to undermine global standard setting at the BCBS.

Keywords: Basel III, clubs, financial regulation, Eurozone, asymmetries.

JEL Classification: F33, F36, F42.

Suggested Citation

Fratianni, Michele and Pattison, John C., Basel III, Clubs and Eurozone Asymmetries (August 15, 2014). Kelley School of Business Research Paper No. 2014-36. Available at SSRN: https://ssrn.com/abstract=2491652 or http://dx.doi.org/10.2139/ssrn.2491652

Michele Fratianni (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States
812-855-3360 (Phone)
812-855-3354 (Fax)

Universita' Politecnica delle Marche ( email )

Piazzale Martelli, 8
60121 Ancona
Italy
39-071-2207120 (Phone)

John C. Pattison

Canadian Imperial Bank of Commerce ( email )

Commerce Court West
199 Bay St
Toronto, Ontario M5L 1A2
Canada

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