Centre news
08.01.2022

Börsen-Zeitung – Banks and unrated corporates can handle Basel III reforms

The Börsen-Zeitung discusses Sebastian Mack's latest paper. He sees no evidence for the gloomy forecasts from the banking industry that introducing the output floor in Europe will result in higher financing costs and declining investment.

Sebastian Mack suggests that introducing the output floor in Europe will primarily affect loans to large corporates lacking external credit ratings, but the impact will be digestible for banks and unrated corporates. Since only a fraction of firms in the EU can demonstrate high creditworthiness, increasing the rating coverage among them would not reduce the impact of the output floor. Nevertheless, national central banks should follow the example of the Banque de France and set up public rating registers for large corporates. This would help banks improving their risk management capabilities.

Read the article (in German) here.