Basel III and We: The Basel Accords are a series of global bank regulatory regimes, the third of which added safety measures to an evolving global financial system after the 2008 crisis. One of III’s keys was “sticky deposits,” (those more likely to stick around), thought to add a measure of stability to a bank.
Since then, nearly everyone got a bank app on their phone, and sticky deposits got slippery. A “bank run” became a “bank walk,” and is now just a “bank click.” George Bailey can’t stand in front of the Savings & Loan pleading with customers to keep the faith if there’s nobody outside the bank.
Today his clients can make a full-balance transfer while they (literally) dance by the light of the moon. This benefits larger banks stateside, as savvy clients chase rates. (This is much more of an issue in the US, where the banking system is fragmented – read on).
Joe’s Bank & Grill: Some say the U.S. has far too many banks (chart below): The number of U.S. banks has fallen by ~75% over the past 40 years but still dwarfs other countries. This might be why their economy is a) relatively robust, and b) constantly shaking out losing banks -- they’re all clambering for clients. Like their politics, it’s messy, but somehow keeps working, and makes for gripping news.
This Week’s Global Insights:
Not out of the woods
Although the U.S. equity market has been holding its own in the face of multiple headwinds, the threat of market volatility remains. We examine three lingering risks investors should keep top of mind as we near the time of year a period when market performance tends to moderate.
Regional developments: A slight rebound in Canadian housing; U.S. commercial lending continued to tighten in Q1; BoE sees UK dodging recession with sharply higher GDP growth projection; China’s economic recovery weakened slightly in April.
More Here: Global Insight Weekly.
Have a great weekend! (Maybe put on some sunblock).
Mark