Trichet presented the following key points on Basel III:
· Basel III represents a decisive improvement in global capital standards.
· The Long-term Economic Impact study is particularly noteworthy. It reminds that tighter rules can be beneficial for economic welfare, for the simple reason that they help avoid the major crises triggering abrupt busts, deep recessions and threats of depression that are so damaging to our societies. The study suggests in particular that if tighter rules were to lower the yearly probability of a major financial crisis by 1 per cent, this could correspond, on average, to an annual output gain of 0.6%.
· The study also suggests that the increase in capital requirements, which is a part of the Basel III consensus, would indeed significantly reduce the probability of a crisis. Of course, the figures need to be interpreted with caution, but the various models applied in the impact study all suggest that the net social benefits of strengthened regulation can be substantial.
· The agreement strikes a good balance between the objective of decisively strengthening the resilience of the financial sector in this new permanent regime, and establishing a transitional period which is sufficiently well crafted not to hamper the ongoing recovery.
He concluded by saying that ”it is essential to preserve, consolidate and reinforce the remarkable unity demonstrated by the international community in the crisis period.”
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