The reform of the capital framework, which will improve the quantity and quality of banks’ capital and thus their capacity to absorb losses, is certainly a particularly welcome development. Increasing the amount of losses the banks’ investors are able, and required, to take, reduces the danger of taxpayers once again having to foot the bill.
The phenomenon of systemically important banks, however, also shows that Basel III is by no means the final step. The internationally agreed rules for dealing with the “too-big-tofail” issue now have to be implemented quickly – and in an internationally consistent manner. The oversight and, if necessary, regulation of the shadow banking system remain atop the reform agenda.