{"id":30183,"date":"2022-04-20T21:00:00","date_gmt":"2022-04-20T19:00:00","guid":{"rendered":"https:\/\/www.11onze.cat\/?p=30183"},"modified":"2022-04-22T09:21:48","modified_gmt":"2022-04-22T07:21:48","slug":"impact-basel-iii-paper-gold","status":"publish","type":"post","link":"https:\/\/www.11onze.cat\/en\/magazine\/impact-basel-iii-paper-gold\/","title":{"rendered":"The impact of Basel III on &#8216;paper gold&#8217;"},"content":{"rendered":"<div class=\"component text\">\n  <div class=\"container\">\n\n\n    <div class=\"row\">\n      <div class=\"col  col-lg-8  offset-lg-2\">\n        <h3><b>The entry into force of the Basel III regulations introduced new regulatory standards with the aim of strengthening supervision and reducing risk-taking in the banking sector. Even so, it aims to limit speculation in gold investment through derivatives, which allowed the creation of a bubble based on the issuance of securities not backed by physical gold.<\/b><\/h3>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The 2008 financial crisis made it clear that<\/span><b> banks did not have sufficient reserves to cope with an economic downturn and to cover the risks<\/b><span style=\"font-weight: 400;\">. This led to the failure of large banks and financial institutions, spurred by the collapse of <\/span><a href=\"https:\/\/www.ccma.cat\/324\/qui-sen-recorda-a-wall-street-de-la-caiguda-de-lehman-brothers\/noticia\/2875320\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Lehman Brothers<\/span><\/a><span style=\"font-weight: 400;\">. The domino effect resulted in one of the biggest global economic crises in history.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In response, the Basel Committee on Banking Supervision (<\/span><a href=\"https:\/\/www.bis.org\/bcbs\/index.htm\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">BCBS<\/span><\/a><span style=\"font-weight: 400;\">) developed and approved a set of regulatory measures under Basel III, which impose requirements on the banking sector to <\/span><b>implement asset policies designed to reduce the likelihood of a repeat banking collapse.<\/b><\/p>\n<p><span style=\"font-weight: 400;\">A large part of these requirements relate to bank capital buffers, stress testing, or market liquidity and, as with the Committee&#8217;s other standards<\/span><b>, members are committed to implementing and enforcing them in their national jurisdictions.<\/b><span style=\"font-weight: 400;\"> The set of measures is not expected to be fully implemented until 2023, but the rules on bank liquidity structures were applied to European banks from 28 June 2021.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><b>Reserves sufficient to cover 85% of unallocated gold<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Investment funds, futures contracts, ETFs or other securities that have gold as an underlying, but do not allocate an amount of physical gold bullion or coins to investors <\/span><b>have allowed the same speculative model based on FIAT money<\/b><span style=\"font-weight: 400;\">. The new regulation aims to end or limit this business model based on the issuance of securities backed by a quantity of gold that does not actually exist, as it can generate financial bubbles that trigger many economic crises and subsequent bank collapses.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Thus, the regulation reclassifies physical, allocated gold as a Tier 1 asset (the safest tier), comparable to cash, while it continues to categorise paper gold, or unallocated gold, as Tier 3 (the riskiest tier). In addition, it <\/span><b>obliges financial institutions to hold capital buffers of 85%<\/b><span style=\"font-weight: 400;\">, previously 0%, to secure precious metals financing and clearing transactions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The possible consequences of the reclassification of physical gold into a safer asset may trigger the allocated gold market, while unallocated gold becomes a less desirable form of investment. Still, the tendency for <\/span><b>gold price manipulation should diminish<\/b><span style=\"font-weight: 400;\">, at least in the futures markets, because state manipulation is another matter.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Time will tell how effective this new regulation will be in preventing banks and financial institutions from playing Russian roulette with money that is not theirs. A speculative game where taxpayers always end up paying the price. In any case, <\/span><b>the value of physical gold as a safe haven asset par excellence is confirmed<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>If you want to discover the best option to protect your savings, enter <\/b><a href=\"https:\/\/serveis.11onze.cat\/en\/preciosos-11onze\" target=\"_blank\" rel=\"noopener\"><b>Preciosos 11Onze<\/b><\/a><b>. We will help you buy at the best price the safe-haven asset par excellence: physical gold.<\/b><\/p>\n\n      <\/div>\n    <\/div>\n  <\/div>\n<\/div>\n\n\n<div class=\"component cards\">\n  <div class=\"container\">\n    <div class=\"row\">\n      <div class=\"col col-xl-8 offset-xl-2\">\n        <h1>If you liked this article, we recommend you read:<\/h1>\n        <div class=\"cards__wrapper\">\n          <div class=\"card\">\n            <a href=\"https:\/\/www.11onze.cat\/en\/magazine\/value-gold-history-wealth\/\" class=\"card-link\" target=\"_self\"><\/a>\n            <div class=\"card-img\">\n              <img decoding=\"async\" src=\"https:\/\/www.11onze.cat\/wp-content\/uploads\/2022\/02\/THUMBNAIL_HISTORIA_VALOR_OR-800x533.jpg\" class=\"card-img-top\" alt=\"\">\n                <span class=\"card-category\">Culture<\/span>\n            <\/div>\n            <div class=\"card-body\">\n              <p class=\"card-title p2\"><strong>The value of gold<\/strong><\/p>\n              <span class=\"card-time\">6 min read<\/span>\n              <p class=\"card-text small\">Throughout the history of humanity, empires have collapsed, many economic<\/p>\n            <\/div>\n          <\/div>\n\n\n          <div class=\"card\">\n            <a href=\"https:\/\/www.11onze.cat\/en\/magazine\/gold-safe-haven-asset-facing-crisis\/\" class=\"card-link\" target=\"_self\"><\/a>\n            <div class=\"card-img\">\n              <img decoding=\"async\" src=\"https:\/\/www.11onze.cat\/wp-content\/uploads\/2022\/02\/THUMBNAIL_RENDIBILITAT_METALLS_PRECIOSOS-800x531.jpg\" class=\"card-img-top\" alt=\"\">\n                <span class=\"card-category\">Savings<\/span>\n            <\/div>\n            <div class=\"card-body\">\n              <p class=\"card-title p2\"><strong>Gold, a safe-haven asset when facing a crisis<\/strong><\/p>\n              <span class=\"card-time\">4 min read<\/span>\n              <p class=\"card-text small\">With inflation continuing to rise, gold\u2019s resilience throughout<\/p>\n            <\/div>\n          <\/div>\n\n\n          <div class=\"card\">\n            <a href=\"https:\/\/www.11onze.cat\/en\/magazine\/precious-metals-safe-haven-savings\/\" class=\"card-link\" target=\"_self\"><\/a>\n            <div class=\"card-img\">\n              <img decoding=\"async\" src=\"https:\/\/www.11onze.cat\/wp-content\/uploads\/2022\/01\/THUMBNAIL_METALLS_PRECIOSOS_REFUGI_ESTALVI-800x533.jpg\" class=\"card-img-top\" alt=\"\">\n                <span class=\"card-category\">Savings<\/span>\n            <\/div>\n            <div class=\"card-body\">\n              <p class=\"card-title p2\"><strong>Precious metals<\/strong><\/p>\n              <span class=\"card-time\">4 min read<\/span>\n              <p class=\"card-text small\">Financial investments always involve risks, but if we want to make our savings profitable<\/p>\n            <\/div>\n          <\/div>\n\n              <\/div>\n              <br>\n              <br>\n              <div class=\"cards__wrapper\">\n\n        <\/div>\n      <\/div>\n    <\/div>\n  <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"","protected":false},"author":71,"featured_media":30181,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[1],"tags":[15],"class_list":["post-30183","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-invest"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The impact of Basel III on \u2018paper gold\u2019 - 11Onze<\/title>\n<meta name=\"description\" content=\"Basel III regulation aims to limit speculation in gold investment through derivatives. 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