Basel III: Solving the Financial Crisis One Packet at a Time

The financial crisis proved beyond any doubt that the devastating effect of risk interdependence cannot be dismissed. In fact under Basel III, unless a bank is in a position to show adequate provision in catching any kind of early-warning signals, they will be required to increase buffer amounts to guarantee capital adequacy and liquidity as laid out in the accord. As a result banks will need to demonstrate adequate monitoring of their entire transactional environments.