Most importantly, the Basel I and II rules required very little common equity. Much of the eligible capital had poor loss absorbing capacity, which helped trigger the crisis.
Secondly, what was important for the global reach of the financial crisis was that much of the asset and mortgage backed securities, originating from the US, ended up on European banks’ balance sheets.5 This was partly spurred by differences in American and European banks’ capital requirements as the EU moved ahead to implement the Basel II reform in full while the US largely stayed in Basel I and maintained a separate leverage ratio requirement.