Original Research

Basel III countercyclical capital rules: implications for South Africa

Gary Wayne van Vuuren
South African Journal of Economic and Management Sciences | Vol 15, No 3 | a235 | DOI: https://doi.org/10.4102/sajems.v15i3.235 | © 2012 Gary Wayne van Vuuren | This work is licensed under CC Attribution 4.0
Submitted: 30 June 2011 | Published: 22 August 2012

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Abstract

The financial crisis has been blamed on many entities, institutions and individuals as well as the Basel II accord which had just begun to be implemented globally when the crisis erupted. The criticisms resulted in the construction of Basel III, a series of measures designed to augment and repair (but not replace) the Basel II accord. One of these adjuncts addresses the problem of economic procyclicality and suggests ways to mitigate it through capital charge increases when economies overheat and capital charge reduction in economic contractions. The consequences of this proposed measure's introduction for South African banks is explored.

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