Editing Basel II (section)

==2008 financial crisis==
The role of Basel II, both before and after the [[2008 financial crisis]], has been discussed widely. While some argue that the crisis demonstrated weaknesses in the framework,<ref name=CML /> others have criticized it for actually increasing the effect of the crisis.<ref>{{cite web|url=http://www.businessweek.com/magazine/content/08_17/b4081083014665.htm |title=How New Banking Rules Could Deepen the U.S Crisis |work=Bloomberg.com |url-status=dead |archive-url=https://web.archive.org/web/20111117181856/http://www.businessweek.com/magazine/content/08_17/b4081083014665.htm |archive-date=2011-11-17 }}</ref> In response to the [[2008 financial crisis]], the [[Basel Committee on Banking Supervision]] published revised global standards, known as [[Basel III]].<ref>{{cite journal|url=http://www.bis.org/publ/bcbs179.htm|title=The Basel Committee's response to the financial crisis: report to the G20|website=Bis.org|date=2010-10-19}}</ref> The Committee claimed that the new standards would lead to a better quality of capital, increased coverage of risk for capital market activities and better liquidity standards among other benefits.

[[Nout Wellink]], former chairman of the [[Basel Committee on Banking Supervision|BCBS]], wrote an article in September 2009 outlining some of the strategic responses which the Committee should take as response to the crisis.<ref>[http://www.banque-france.fr/fileadmin/user_upload/banque_de_france/publications/Revue_de_la_stabilite_financiere/etude13_rsf_0909.pdf Beyond the Crisis: the Basel Committee's strategic response]</ref> He proposed a stronger regulatory framework which comprises five key components: (a) better quality of regulatory capital, (b) better liquidity management and supervision, (c) better risk management and supervision including enhanced Pillar 2 guidelines, (d)
enhanced Pillar 3 disclosures related to securitization, off-balance sheet exposures and trading activities which would promote transparency, and (e) cross-border supervisory cooperation. Given one of the major factors which drove the crisis was the evaporation of liquidity in the financial markets,<ref>{{cite web|url=http://www.canstar.com.au/global-financial-crisis/|title=Global Financial Crisis - What caused it and how the world responded - Canstar|work=canstar.com.au|date=22 June 2018 }}</ref> the BCBS also published principles for better liquidity management and supervision in September 2008.<ref>{{cite journal|url=http://www.bis.org/publ/bcbs144.htm|title=Principles for Sound Liquidity Risk Management and Supervision – final document|website=Bis.org|date=2008-09-25}}</ref>

A recent [[OECD]] study<ref>{{cite journal|title=Systemically Important Banks and Capital Regulation Challenges |publisher=OECD Publishing |date=December 2011|doi = 10.1787/5kg0ps8cq8q6-en|series = OECD Economics Department Working Papers|doi-access=free}}</ref> suggest that bank regulation based on the Basel accords encourage unconventional business practices and contributed to or even reinforced adverse systemic shocks that materialised during the [[2008 financial crisis]]. According to the study, capital regulation based on risk-weighted assets encourages innovation designed to circumvent regulatory requirements and shifts banks' focus away from their core economic functions. Tighter capital requirements based on risk-weighted assets, introduced in the Basel III, may further contribute to these skewed incentives. New liquidity regulation, notwithstanding its good intentions, is another likely candidate to increase bank incentives to exploit regulation.

Think-tanks such as the [[:fr: Forum Mondial des Fonds de Pension|World Pensions Council (WPC)]] have also argued that European legislators have pushed dogmatically and naively for the adoption of the Basel II recommendations, adopted in 2005, transposed in European Union law through the [[Capital Requirements Directive]] (CRD), effective since 2008. In essence, they forced private banks, central banks, and bank regulators to rely more on assessments of [[credit risk]] by private rating agencies. Thus, part of the regulatory authority was abdicated in favour of private rating agencies.<ref>M. Nicolas J. Firzli, "A Critique of the Basel Committee on Banking Supervision" ''Revue Analyse Financière'',  Nov. 10, 2011, & Q2 2012</ref>

Long before the implementation of Basel II [[George W. Stroke]] and [[Martin H. Wiggers]] pointed out, that a global financial and economic crisis will come, because of its systemic dependencies on a few rating agencies.<ref>[[Strategische Unternehmensführung (magazine)|Strategische Unternehmensfuehrung]] Nr. 1, 1999. Munich, St. Gallen 1999, {{ISSN|1436-5812}}</ref> After the breakout of the crisis [[Alan Greenspan]] agreed to this opinion in 2007.<ref>{{cite news|url=https://www.faz.net/aktuell/wirtschaft/unternehmen/alan-greenspan-die-ratingagenturen-wissen-nicht-was-sie-tun-1464553.html|title=Alan Greenspan: "Die Ratingagenturen Wissen nicht was sie tun"|author=Frankfurter Allgemeine Zeitung GmbH|date=22 September 2007|newspaper=FAZ.NET}}</ref> At least the [[Financial Crisis Inquiry Commission|Financial Crisis Inquiry Report]] confirmed this point of view in 2011.<ref>The Financial Crisis Inquiry Report, Official Government Edition, Washington 2011, S XXV.</ref><ref>The Financial Crisis Inquiry Report, Official Government Edition, Washington 2011, S 20.</ref>