More on basel iii regulating bank liquidity

Free Slides from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ More on Financial Reform and Basel III: Regulating Bank Liquidty Post prepared September 12, 2010 Terms of Use: These slides are made available under Creative Commons License Attribution—Share Alike 3.0 . You are free to use these slides as a resource for your economics classes together with whatever textbook you are using. If you like the slides, you may also want to take a look at my textbook, Introduction to Economics , from BVT Publishers.

Basel III and Liquidity ,[object Object],[object Object],[object Object],Post P100912 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ Building of The Bank for International Settlements in Basel, Switzerland, where BCBS meetings are held Photo source: http://commons.wikimedia.org/wiki/File:BIZ_Basel_002.jpg

What is Liquidity? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Post P100912 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ Photo source: Nicole-Koehler, http://commons.wikimedia.org/wiki/File:Faucet.JPG

Why do Banks Need Liquidity? ,[object Object],[object Object],[object Object],[object Object],[object Object],Post P100912 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ Headquarters of the bank BNP-Paribas in Paris, France Photo source: Tangopaso, http://commons.wikimedia.org/wiki/File:Siege_BNPP_rue_Taitbout.jpg

Liquidity Crises: Bank Runs ,[object Object],[object Object],[object Object],Post P100912 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ Bank run in Birmingham, England, September 2007 Photo source: Lee Jorndan, http://commons.wikimedia.org/wiki/File:Birmingham_Northern_Rock_bank_run_2007.jpg

Deposit Insurance as Protection Against Runs ,[object Object],[object Object],[object Object],Post P100912 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ An FDIC deposit insurance sign from the 1930s. The maximum insurance is now $250,000 per depositor Photo source: Mathew Bixsantz, http://commons.wikimedia.org/wiki/File:FDIC_5000_sign_by_Matthew_Bisanz.JPG

Liquidity Crises: Fire Sales ,[object Object],[object Object],[object Object],Post P100912 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ Photo source: Julia Manzerova, http://commons.wikimedia.org/wiki/File:Fire_Evacuation_Sale_%281186978688%29.jpg

Liquidity Crisis and Insolvency: Example ,[object Object],[object Object],[object Object],[object Object],[object Object],Post P100912 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

How a Liquidity Spiral Spreads the Crisis ,[object Object],[object Object],[object Object],[object Object],[object Object],Post P100912 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ This dramatic NASA experiment used colored smoke to show how an airplane’s wingtip creates a rapidly spreading spiral vortex. Photo source: NASA, http://commons.wikimedia.org/wiki/File:Airplane_vortex_edit.jpg

What Kind of Regulations can Reduce Liquidity Risk? ,[object Object],[object Object],[object Object],[object Object],[object Object],Post P100912 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Basel III: Proposed Liquidity Coverage Regulation ,[object Object],[object Object],Post P100912 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ ,[object Object],[object Object],[object Object],[object Object],[object Object]

Basel III: Proposed on Net Stable Funding Regulation ,[object Object],[object Object],Post P100912 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ ,[object Object],[object Object]

Will Basel III Succeed in Reducing Liquidity Risk? ,[object Object],[object Object],[object Object],[object Object],Post P100912 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/

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