Major turmoil in the financial world in the 1970s and 1980s was due to a deterioration of asset quality of banks. Many countries mostly members IMF have experiences significant banking sector distress. Basel accords and from a general view, has to be taken collectively as it is clear from the above that it is an incremental reform, starting from Basel I all the way to Basel II to Basel III.  Definitely, Basel III impact all banks, while the level of impact differ according to the type, scale and location of banks.

Major turmoil in the financial world in the 1970s and 1980s was due to a deterioration of asset quality of banks. Many countries mostly members IMF have experiences significant banking sector distress. Basel accords and from a general view, has to be taken collectively as it is clear from the above that it is an incremental reform, starting from Basel I all the way to Basel II to Basel III.  Definitely, Basel III impact all banks, while the level of

When looked at the Basel accords in its entirety, the reforms incurred by new pillars erecting Basel III, the introduced rules will strengthen the capital reserves and introduce stringent reporting requirements that cover key risks, liquidity and leverage parameters. In my humble opinion a deregulation at this moment can be harmful for banking industry...

Sir,

Financial sector in general, and the banking in particular are the backbone of each economy in the world and hence needs prudential norms for their management, regulation and supervision. The past financial crisis such as of year 2008 was caused primarily by deterioration in asset quality which occurred in my opinion because of three things: non-compliance of regulations, lack of transparency and good governance, and absence of ethical behavior of institutions. Liberalization of financial sector is good for expansion, growth and competition. However, Liberalization in the form of relaxing prudential norms and inviting unhealthy competition may again lead to financial crisis. In future, the implementation of Basel guidelines in letter and spirit followed by ethical behavior of both bank officials and bank management can protect from big financial crisis.

Dear John,

If I understood your question, I believe that you are talking about a "HUGE CRISIS" like the last one of Subprime. So, I would say that, "To avoid another financial meltdown" can not be confunded with 'business cycles'.

But how do we know when a Business Cycle is becoming a total meltdown?

This is why I believe that the guided regulation or guided de-regulation can be the way. It permits us to foresee when there are signals that one is becoming the other!

All my best wishes.

Hess

Thank you for your various contributions in this matter.In other words there is no one way to avert such but by proactiveness and global cooperation. But with the current American leadership pushing towards protectionism I fear that there would be consequences in the synergy required for global preparedness. What do you think?

Dear John, your fear about the policy of over protectionism to domestic firms is true. However, these days unemployment is a big problem before most countries in world. So, the governments are trying to protect job for their own citizens. It is true that this may result into loss of some good opportunities which the competitive environment and an open economy might offer. So, there is need to keep balance between the two.

Thank you Bhag Singh Bodla if I am to understand you well the effect of certain policy changes on globalization in the long run would most likely not be substantial as a result of counter measures that would fall in place to adjust to new realities or are my misinterpreting your thoughts on the matter?

Economic cycles are a norm in modern world, which means that the recessions, depressions, recoveries and booms shall be happening as a norm in a 'normal' ecosystem. The only way, I can think of, to avoid the recessions/depressions is to look at the real, rather than perceived needs; and direct all the production activities to fulfill the real human needs rather than making the consumers perceive some needs and then trying to fulfill those...