The Basel Accords and their Consequences for the Economy

The French Banking Federation has published a memo on the Basel Accords and their consequences on financing the economy.

French banks are not opposed to regulation, they want it to be tailored and take into account different banking models.

They have implemented all prudential measures aimed at ensuring the stability of the global banking system and ensuring effective control of banks. In particular, they developed, at the request of the supervisor, internal risk assessment models that proved successful during the financial crisis.

On the contrary, the discussions in progress at the Basel Committee aim to promote a global standard method that no longer analyses client-by-client risks but sets requirements based on global averages.

The adoption of such an approach, based on the dominant American model, would force French and European banks to further increase their capital levels, unrelated to the actual level of risk. This is in total contradiction with the mandate given by the G20 regarding the global harmonization of methods of calculating risk without a significant increase in capital or discriminating between banking models.

Finally, this change in method would limit the ability of French and European banks to finance the economy.