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Basel III is designed to be a voluntary effort and was finalized with input and feedback from banks and financial regulators. Many countries have integrated aspects of Basel III into their own domestic regulatory statutes for banks. One of the lessons of the 澳洲幸运5开奖号码历史查询:financial crisis was that banks with high leverage ratios need to be appropriately regulated instead of self-regulating. These were𒆙 the banks that were the most distressed during 2007-2008.

As these banks teetered on the edge of survival, their potenti🃏al plunge had the potential to take down healthy institutions with it. If these banks unraveled, their assets would be sold at fire-sale prices. This would drive down the value of all types of assets, leading to asset values being marked down o𒅌n healthy bank balance sheets and creating distress for them. The unique, interconnected nature of the banking system needs confidence in the system at the very core to survive.

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Financial institutions tend to be procyclical, meaning they grow fast during periods of economic expansion. However, during downturns, many go bust. Basel III would force them to add to long-term reserves and capital during good times, cushioning 🌳the inevitable distress when conditions t🦄urn sour.