The New Basel Capital Accord (Basel II) from a Macroeconomic Point of View

The Basel Committee on Banking Supervision and the EU Commission have submitted – widely harmonised – proposals for reforming the capital requirements for banks and investment firms (Basel II). The object of the reform is to strengthen the stability of the financial market by aligning the regulatory capital requirements of banks more closely with underlying risks, especially credit risks, an object that is to be achieved chiefly by the greater use of new risk assessment methods to be applied internally by the banks. Macroeconomic aspects on the regulatory side were, for the time being, almost ignored by both proposals. The resultant consequences that might arise for the overall economy and financial system triggered an intense debate among scientists and politicians which has not yet been settled.