Question: Several regulatory objectives are encompassed in the Basel III framework. These include: (1) increased quality of capital; (2) increased quantity of capital; (3) reduced leverage,

Several regulatory objectives are encompassed in the Basel III framework. These include: (1) increased quality of capital; (2) increased quantity of capital; (3) reduced leverage, through the introduction of a backstop leverage ratio; (4) increased short-term liquidity coverage; (5) increased stable long-term balance sheet funding; and (6) strengthened risk capture, notably counterparty risk.

Discuss the relevance and efficacy of the liquidity coverage ratio and the net stable funding ratio. Also, discuss whether you believe that these ratios have improved or hindered the stability of banking systems.

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