Analysis: Basel III rules threaten economic recovery

10/6/2011 | Wall Street Journal, The

Global authorities reacted to the financial crisis by quickly agreeing to Basel III capital and liquidity rules for banks. However, those rules could ultimately thwart the economic recovery. "[W]ith the economy now slowing, regulators may have trapped the world financial system in a highly deflationary doom-loop, in which banks are forced to shrink their balance sheets in a futile effort to meet ever-retreating capital-ratio targets," according to an analysis by Simon Nixon.

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Wall Street Journal, The

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