Nevertheless, whereas the Basel Accord, of course, requires institutions to set aside capital to cover credit-, market and operational risk, “compliance risk” is not covered. Is this a missed opportunity? Should the drafting panels of the new Capital Accord have spent time on a concept like “compliance capital”?
It is undisputable that the financial system in most advanced countries is now sounder than at the onset of the financial crisis in 2007: Funding of the core of the financial system (banks) is more stable, An adjustment process leading to more sustainable levels of leverage took place, and Banks are significantly more capitalized.