Home > Predictions > A second credit crunch awaits

A second credit crunch awaits

Bankers around the world are on tender-hooks awaiting the announcement of the new Basel III rules on capital adequacy and liquidity.

The Aussie banks are particularly concerned, given their low deposit base relative to their massive lending volumes.  The ‘gap’ is made up from the international wholesale debt markets – and these markets are notoriously volatile and unpredictable.

All I know is that Basel II created a bubble by relaxing the rules and therefore Basel III must create a credit crunch by tightening the rules.

Simple.

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