No room for emerging market complacency over Basel III - BBVA Research

- Friday, November 25, 2011

No room for emerging market complacency over Basel III - BBVA Research

BBVA Research chief economist for emerging markets (EMs) Alicia García-Herrero said that banks in EMs need to take a "zero complacency approach" towards the new capital requirements that the Basel III accord entails.

Speaking at the Institute for Global Economics, Asian Development Bank conference, she said that EM banks often have higher capital ratios than those in developed countries, and that capital is frequently of good quality.

However, as EMs are generally less able to raise non-bank finance domestically or internationally, García-Herrero warned that they will be affected as developed world banks are "scrambling for capital."

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Capital ratios are particularly important in EMs because credit growth is still crucial for economic growth, she noted.

García-Herrero also called for greater involvement of EMs in global financial regulation.

To read her full presentation, go to this link