ICFR Discussion Paper - The Impact of Basel III on the Real Economy

Studies of the impact of Basel III on GDP have shown strikingly differing results, with some private sector studies estimating costs up to eight times higher than exercises under the aegis of the Basel Committee, the Financial Stability Board or the IMF. This ICFR Discussion Paper analyses the assumptions in these studies, tracing the origin of some of the disagreements to sensitivity around four key sets of assumptions.  The Paper suggests that a note of caution is necessary regarding the interpretation of the results and argues that given the variability of outcomes, further studies should not be used to argue for delaying implementation of the agreement.