Bank Regulation: Capital, Liquidity, and Basel Accords

This lecture covers the regulation of banks, focusing on the importance of capital and liquidity requirements. It delves into the rationale behind bank regulation, including the need to address externalities such as systemic risk and moral hazard. The discussion includes the implementation of capital regulation, the Basel accords, risk-weighted assets, and the benefits of leverage ratios. The lecture also explores liquidity regulation, the role of the central bank as a lender of last resort, and macroprudential regulation to prevent systemic risk. Examples from Europe and Switzerland are provided to illustrate the use of macroprudential instruments. Overall, the lecture emphasizes the significance of regulatory measures in ensuring the stability and soundness of the banking sector.