Basel I was amended in 1996 to take into account market risks in banks’ trading books, whereby an additional capital charge was introduced to cover market risk. Although Basel I was meant for implementation by members of the BCBS, many non-member countries with internationally active banks also started implementing the Basel standards. Basel I had weaknesses.
And I’ve recorded that the New Zealand housing market currently does not warrant such a severe intervention, so that, for example, yesterday’s interest rate increase was just part of the normal operation of monetary policy to ensure continuing consumer price stability. There’s an old adage that a popular central banker is seldom a good central banker.