"Three crucial elements of the new regulatory framework are higher minimum capital ratios, higher quality of capital, and tighter liquidity requirements. To answer the questions listed in the introduction we need to 'feed' these features into the available macroeconomic models. This is all but straightforward. First, some of the models do not feature bank liquidity, or bank capital, or both. Second, even the models featuring bank capital are typically estimated or calibrated based on measures of capitalization other than the TIER 1 measure chosen in the Basel III accord. Third, even the models that feature bank liquidity adopt very simple definitions (eg the ratio of cash and government bonds to total assets), quite distant from the complex measures introduced by the new rules."
BIS Working Papers
No 338
BASEL III: Long-term impact on economic performance and fluctuations
http://www.bis.org/publ/work338.pdf
