The Basel Committee’s capital reforms, known as Basel III, substantially raise capital
requirements from pre-crisis levels to reduce the probability of bank failures and the
associated risks to taxpayers and to financial stability.
Recently, much has been made of the perceived shortcomings of Basel III. Some argue that
Basel III, which comes into effect next year, is not enough. Others argue that Basel III
is too complex and should be replaced by a simple leverage ratio, calculated as tangible
equity to non-risk weighted assets.
In my view, the Basel III agreement fundamentally enhances national and global financial
stability by both raising the level of capital required by banks, and by simplifying the
The following article is an op-ed by Mr Stefan Ingves, Governor of the Sveriges Riksbank
and Chairman of the Basel Committee on Banking Supervision, published in the Wall Street
Journal, 15 October 2012.
The Basel III framework document can be downloaded from the BIS website at this link: