Necessary Banking Changes to Prevent Another Global Financial Crisis

1956 Words4 Pages
bulb-icon

Recommended: The 2007 financial crisis

Question 1
Financial crisis that affected globally became the greatest shock to the world financial system and financial markets of USA and Europe was mainly affected. Underlying weaknesses in financial regulations were considered as one of causes of Global Financial Crisis. As regulations are blamed in current (2007-2008) crisis it should be taken under consideration that cause lies in Basel I and Basel II. However Basel II was not fully implemented before crisis since it was entered into force in January 2008 in EU and since April 2010 in US. (The de Larosiere Group, 2009). Moreover, if Basel II had fully implemented it could help to prevent the crisis or at least to mitigate it but after cause researches Basel III measures were designed in terms of liquidity, leverage and capital to protect the economy from crisis. Global standards under Basel III must be fully implemented by 2019. Based on www.basel-iii.worldfinance.com “Basel III and related measures by national and supranational regulators will force the banks to save a much bigger capital base – in effect, a foundation stone of solid assets designed to withstand sudden market disruption. In general Basel III will force banks to become smaller relative to the size of their national economies. Lower levels of leverage – the ratio of capital to assets – will become obligatory. And they must have greater stores of spare cash on hand to tide them over temporary difficulties therefore nowadays banking industry is facing challenging times. Regulation is one part but important part is compliance. As per Forbes.com these complex and interrelated challenges will be central to banks’ ability to regain and maintain high performance. “However, Forbes.com believe that for banks and othe...

... middle of paper ...

... before being processed.There are two clearing sessions per day: the first session clears new cheques while the second exchanges returned items.Final settlement takes place across participants’ accounts held at the Central Bank via UAEFTS on a same-day basis.” (https://globalconnections.hsbc.com/downloads/treasury_management_profile-ae.pdf )

List of Reference https://globalconnections.hsbc.com/downloads/treasury_management_profile-ae.pdf http://www.bankofcanada.ca/core-functions/financial-system/oversight-designated-clearing-settlement-systems/canadas-major-payments-systems/general-information/ http://www.centralbank.ae/en/index.php?option=com_content&view=article&id=69&Itemid=108 http://www.bankofcanada.ca/core-functions/monetary-policy/framework/ http://www.bankofcanada.ca/about/history/ http://www1.worldbank.org/finance/assets/images/UnitedArabEmirates_ROSC.pdf

Show More
Related

  • The Financial Crisis of 2007-2008 and The Federal Reserve

    2612 Words  | 6 Pages

    The financial crisis of 2007–2008 is considered by many economists the worst financial crisis since the Great Depression of the 1930s. This crisis resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis led to a series of events including: the 2008–2012 global recessions and the European sovereign-debt crisis. The reasons of this financial crisis are argued by economists. The performance of the Federal Reserve becomes a focal point in this argument.

    Read More

  • The Dodd-Frank Wall Street Reform and Consumer Protection Act

    1575 Words  | 4 Pages

    The presence of systemic risk in the current United States financial system is undeniable. Systemic risks exist when the failure of one firm may topple others and destabilize the entire financial system. The firm is then "too big to fail," or perhaps more precisely, "too interconnected to fail.” The Federal Stability Oversight Council is charged with identifying systemic risks and gaps in regulation, making recommendations to regulators to address threats to financial stability, and promoting market discipline by eliminating the expectation that the US federal government will come to the assistance of firms in financial distress. Systemic risks can come through multiple forms, including counterparty risk on other financial ...

    Read More

  • The Pros And Cons Of Moral Hazard

    761 Words  | 2 Pages

    As long as “securitization”, “too big to fail” are not resolved, there will absolutely be more financial crisis in the future. The impact of this financial crisis is world-wide. But after the crisis, how many of them learn to earn less money that will against their desire? Lehman Brothers is like a carriage that goes on and on, plundering trophies and valuables, going uphill. They never need to consider hit the break and slow down, or plunder less; while they passed the climax and started to go downhill, they are no longer able to hit the break. The trophies and valuables became the burden that accelerated the

    Read More

  • How Did The Federal Reserve Act American Banking System Reform

    498 Words  | 1 Pages

    Federal Reserve Act - American banking system reform; created 12 regional banks that were only controlled by the individual banks in that district; gained money by supporting loans of banks at an interest rate that the Federal Reserve would set

    Read More

  • Dodd Frank Act Essay

    1200 Words  | 3 Pages

    The Dodd-Frank Wall Street Reform and Consumer Protection Act was a direct response to the global financial crisis of 2008 and was put into effect on July 21st, 2010. The main purpose of the act was to reduce risk in the financial system to prevent a future financial crisis. In order to understand the Dodd-Frank Act and its effects, it is important to identify some of the key components behind the financial crisis. As such, a brief synopsis of the crisis will be given before delving into the implementation and effects of the Dodd-Frank Act. The key provisions to be focused on will be systemic risk regulation, the Volcker rule, and regulation of financial instruments.

    Read More

  • The Causes Of The 2008 Global Financial Crisis

    886 Words  | 2 Pages

    This essay will examine the causes of the 2008 Global Financial Crisis (GFC) from a Marxist perspective. This paper will specifically examine and critique how Marx’s Theory of Crisis can be applied to understand and interpret the underlying structural causes of the 2008 Global Financial Crisis.

    Read More

  • Analysis Of The Movie Inside Job

    855 Words  | 2 Pages

    In the first part, “the foundation” is explained and details about the five main dominating banks. The rating agencies are discussed as well as they do not have a reliable rating system for financial institutions. The second part is about the “mortgage boom” in US and how it leaded toward the debt burden and how money is created out of thin air. The third part is about “the crisis” which was warned by advisers

    Read More

  • Elements of The Global Economy

    2129 Words  | 5 Pages

    critical role banks play in the market system. In today's globalized system, a credit crisis can

    Read More

  • 2008 Financial Crisis Essay

    1536 Words  | 4 Pages

    The "subprime crises" was one of the most significant financial events since the Great Depression and definitely left a mark upon the country as we remain upon a steady path towards recovering fully. The financial crisis of 2008, became a defining moment within the infrastructure of the US financial system and its need for restructuring. One of the main moments that alerted the global economy of our declining state was the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and after this the economy began spreading as companies and individuals were struggling to find a way around this crisis. (Murphy, 2008) The US banking sector was first hit with a crisis amongst liquidity and declining world stock markets as well. The subprime mortgage crisis was characterized by a decrease within the housing market due to excessive individuals and corporate debt along with risky lending and borrowing practices. Over time, the market apparently began displaying more weaknesses as the global financial system was being affected. With this being said, this brings into question about who is actually to assume blame for this financial fiasco. It is extremely hard to just assign blame to one individual party as there were many different factors at work here. This paper will analyze how the stakeholders created a financial disaster and did nothing to prevent it as the credit rating agencies created an amount of turmoil due to their unethical decisions and costly mistakes.

    Read More

  • The Global Financial Crisis and Its Impact

    1807 Words  | 4 Pages

    The recent Global Financial Crisis (GFC) initially began with the collapse of credits and financial markets, which caused by the sub-prime mortgage crisis in the US in 2007. The sub-prime mortgages were given to high-risk lenders (with bad credit history) who were in danger of defaulting, which eventually caused a global credit crunch, where the banks were unwilling to lend to each other. In October 2008, the collapse of the major financial institutions and the crash of stock markets marked the peak of this global economic slowdown (Euromonitor International, 2008).

    Read More

  • The Irish Banking Crisis

    2040 Words  | 5 Pages

    In conclusion, we feel that the recommendation we have suggested in this report is a suitable foundation to build a sustainable and prudent financial system in this country. This will facilitate the financial industry both, withdraw out of this crisis and in the future avoid as much as possible inducing the scale of matters at present. As the report suggest, everyone contributed in their own miniscule way to this crisis, we feel that it’s up to every one of us to contribute to the overall recovery of this financial crises and recovery of the nation in general.

    Read More

  • Strategies to Make a Fast Food Restaurant Profitable

    1112 Words  | 3 Pages

    The company policy on credit is that agents and direct clients are strictly on cash and carry while the selected clients have 30 day period to pay their debts.

    Read More

  • Competency Identification Assignment

    738 Words  | 2 Pages

    upon check in and check out. All payments are cleared before the guest leaves the

    Read More

  • Essay On Islamic Banking

    2135 Words  | 5 Pages

    ...ctices. Thus, in order to counter this challenges, better awareness should be create among the customers that Islamic banking is not only valid to Muslims only. It can be widely use by other religion.

    Read More

  • Essay On Banking Sector

    707 Words  | 2 Pages

    It is a known fact that the banking industry plays a huge role in today’s society, the industry has grown rapidly of many decades and still growing. The banking sector is that sector of the society that is actually responsible for the handling of financial assets for other sector of the economy, they do this by investing the financial assets in order to create more wealth in the society while regulating all the activities involved in the process. (What is the banking Sector 2015)

    Read More

More about Necessary Banking Changes to Prevent Another Global Financial Crisis

Open Document