Safe Assets, Fatal Flaw: The Basel III Oversight?
Safe Assets, Fatal Flaw: The Basel III Oversight?
Miles Harris: 7-4-2025
What if the very regulations meant to prevent another banking collapse... are quietly setting us up for the next one?
Basel III was supposed to make the financial system safer. It encouraged banks to hold more liquid, "risk-free" assets like U.S. Treasuries and mortgage-backed securities.
But these so-called 'safe assets' are now sitting on massive unrealized losses. And under the right stress conditions, those losses could pose a major threat to the banking system.