Under Basel III, the current international banking regulation, banks must maintain two Tier 1 capital ratios that treat risky assets differently. The Basel Committee uses the critical average risk weight (CARW) framework developed by the Bank of England to determine which ratio is the binding...

At present primarily governed by market forces with little regulatory interference, international financial relations have become increasingly important for global as well as national economies. Contributors to this volume consider whether this absence of regulation is wise, in the light of...