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Banking Stability and the Basel Capital Standards
By L. Jacobo Rodriguez
Introduction
In thinking about bank stability and the Basel Accord, rather than concentrating on whether the Basel Committee has gotten every little detail of the new Accord right—a task that can greatly affect banks' bottom lines—it is more appropriate for our present purposes to concentrate on some more general—and perhaps fundamental— questions. How successful has the original Basel Accord been in accomplishing its stated goals? How successful will Basel II be in accomplishing those goals? Are those goals desirable? And perhaps the most fundamental question of all: Is the Basel Accord—that is, the international harmonization of capital standards—necessary or desirable to have a stable financial system?
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