downwards shift in gdp level trend even if good times may then mean a return to the same rate of growth. the economic costs are significant. of course, any estimate would vary depending on the crisis and assumptions, but a mainstream assessment would be just over 60 per cent of precrisis gdp. so transposed to swedish conditions, around sek 2 000 billion is at stake. this happens to be in the same order of magnitude as the balance sheet total of three of the four major swedish banking groups. and, of course, this kind of shock to the national economy would not spare the country ’ s citizens in their role as taxpayers. financial crises impact severely on the public treasury. a recently - presented british investigation – the so - called vickers report – shows how the bis central bankers ’ speeches financial crisis, since 2007, has increased the united kingdom ’ s public net debt by about 100 per cent of gdp. basel iii is strengthening the system ’ s airbags … the crisis of recent years has made us painfully aware of the financial system ’ s vulnerability and its importance for the real economy. the need for bigger and better airbags is obvious. these lessons lie behind the global basel iii agreement. the most important areas of basel iii deal with the quantitative requirements for capital and liquidity being placed on the banks. … with a substantial amount of equity … the basel committee ’ s analysis has concluded that the banks need substantial resilience. the crisis has shown the risk of considerable losses. so capital requirements are being increased in basel iii, above all for common equity tier 1. 1 the minimum requirement for the banks ’ equity is being set at 4. 5 per cent of riskweighted assets – more than double the requirement under basel ii. a capital conservation buffer of 2. 5 per cent, added to a contra cyclical buffer, will create a stronger shock absorber than previously was the case. this contracyclical buffer is built up when times are good to then provide a safety margin during downturns. the capital adequacy requirement is also complemented with a pure leverage ratio measure, meaning that equity may not fall below 3 per cent of total assets. under earlier frameworks, other capital, of lower quality, could have accounted for a large part of capital adequacy. this applies to both additional tier 1, i. e. other instruments that cover losses while the bank is active ( going concern ), and tier 2, which is to say financing

daniel mminele : south africa in the global regulatory context – progress, challenges and opportunities keynote address by mr daniel mminele, deputy governor of the south african reserve bank, at the 8th risk and return conference, cape town, 13 march 2014. * 1. * * introduction good morning ladies and gentlemen. thank you to incisive media for the kind invitation and the privilege for me to deliver the opening keynote address for this 8th risk and return south africa conference. this conference provides a good opportunity for dialogue and sharing of experiences as it brings together a wide spectrum of financial market participants, especially risk and investment management professionals, at a time when there are critical, wide - ranging and historic changes to the financial markets landscape. while there does not seem to be any major disagreement around the weaknesses and vulnerabilities that were exposed by the global financial crisis, there have been intense debates around how best to go about strengthening regulatory frameworks to restore confidence in financial systems. these range from appropriateness of certain regulatory standards based on country - specific circumstances ( danger of “ one - size - fits - all ” approach ), the speed and sequencing of implementation, to possible unintended consequences that could stifle innovation and development, reduce liquidity in certain markets, or affect the flow and cost of credit. i have been asked to speak on the progress, challenges and opportunities of global regulatory developments, and in particular, south africa ’ s experience. the global financial regulatory reform agenda is a daunting and gigantic project for all involved, and in the limited time available this morning one is unlikely to do justice to the task. following some remarks to set the context, i will talk about the regulatory alignment and supervisory change in south africa, make brief comments about our regulatory architecture reform, then touch on the 2014 g20 priorities for financial regulatory reform and look at where south africa is in relation to that. 2. from crisis to basel iii the costs of the global financial crisis were significant and included substantial job losses and depressed economic activity. the severity of it was compounded by a number of factors, including a pro - cyclical deleveraging process and weaknesses in the banking sector, such as inadequate and low - quality capital, and insufficient liquidity buffers. the interconnectedness of systemically important financial institutions ( sifis ) meant that these weaknesses and consequences thereof, quickly spread to other countries and regions. on the regulatory side, inadequate mandates, autonomy, resources and instances of regulatory