Following the international financial crisis of the late 2000s, the world’s financial leaders have been working towards a standardized banking system that will strengthen banks at an individual level, and thus improve the banking sector’s ability to survive stress when it occurs.
In 2010 the Basel Committee produced a third accord outlining a set of regulations, with the goal of solving the banking system’s ongoing problems. Since then the conversation has yet to cease over whether enough has been done, since the peak of the crisis in 2008, to ensure a stable financial environment that supports growth on an international scale.
The importance of Basel III lies not only on an inter-continental scale, but for individual countries to maintain the required standard regulations to a point of sustainability. In Europe, the debate over the role Britain will play in Basel III has yet to be resolved. During early Basel III discussions in May 2012, Michel Barnier, the French European commissioner for financial regulation, clashed with British Chancellor of the Exchequer George Osborne over the suggestion of higher leverage ratios in the UK, stating that a distortion of competition within the EU had the potential to cause a continental disadvantage.
In recent times the political context surrounding Basel III has not dwindled. In the Autumn Statement released on December 5 2013, Osborne revealed that “Britain is currently growing faster than any other major advanced economy.” As it stands Britain’s rate of recovery, in comparison to that of other EU members and the U.S., puts the country at risk of greater pressure to conform to the standardized regulations proposed in the Basel III accord. For Britain there is a better hope of financial prosperity and continued development in strengthening relations with China. Prime Minister David Cameron cemented that this is indeed the case during his December meetings in China, a country whose own role within Basel III is similarly undetermined. The chancellor noted:
“The Prime Minister’s visit to China this week is the latest step in this government’s determined plan to increase British exports to the faster growing emerging markets — something our country should have done many years ago.”