In November 2016 the Bank for International Settlements (BIS) published an updated economic impact study of Basel III and the ongoing reforms, suggesting the existence of some room for manoeuvre in the creation of additional capital buffers. We demonstrate in this analysis that this room no longer exists in the eurozone, where the dominant role played by banks in financing increases the economic cost of new regulatory requirements and reduces the optimal bank solvency ratio, above which the economic cost exceeds the estimated benefit of tighter regulation.
As the only Latin American country in North America, Mexico plays a special role on the continent. Today it is in the frontline of the new US administration’s swerve towards protectionism and anti-immigration policies. Despite relatively solid macroeconomic fundamentals, Mexico’s economic growth has been disappointing, and its prospects are eroding. The country has to seize the opportunity offered by Donald Trump’s challenge to redefine its economic model, lessen its dependence on the United States and strengthen productivity by further integrating in global value chains.
