Monetary Economies of Production
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Monetary Economies of Production

Banking and Financial Circuits and the Role of the State

Edited by Louis-Philippe Rochon and Mario Seccareccia

The central focus of this book is the relationship between money, the sphere of production, and the State. It explores how best to adapt the fundamental ideas of the circulationist perspective to achieve a better understanding of the financialisation of the production processes within contemporary capitalist economies. Importantly, the expert contributors illustrate that the true challenge ahead is to address how these new emerging forms can be eventually tamed, a challenge that the recent financial crisis has forcefully proven essential.
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Chapter 9: Basel III and the strengthening of capital requirement: the obstinacy in mistake or why ‘it’ will happen again

Bernard Vallageas


On 6 September 2009, after the 2007–2009 financial crisis, the deepest since 1929, the Group of Central Bank Governors and Heads of Supervision, chaired by the French President of the European Central Bank, Jean-Claude Trichet, met in Basel in the headquarters of the Bank for International Settlements (BIS) (2009b). The Group decided to strengthen the capital requirement of banks. However, as Bardoloi (2003) affirmed, that is only new wine in an old bottle. The old bottle(called ‘Basel I’), the institution of capital requirement for banks, had been invented in July 1988 (BIS 1998, 2009a), some months after the October 1987 crash, by the group of central bank governors; and the new wine (called ‘Basel III’) is the strengthening of this requirement: more quality, consistency and transparency of the tier 1 capital, capital conservation measures such as constraints on capital distributions, increase of the leverage ratio, introduction of a counter-cyclical capital buffer. After the 6 September 2009 meeting, the Basel Committee on Banking Supervision published two consultative documents (BIS 2009c, 2009d) on the improvement of the capital requirement and launched a consultation process of the financial actors. In December 2010, it published two documents (BIS 2010a, 2010b), the new wine, to implement this improvement.

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