Tightening the money tap

Banks are being forced to increase the level of capital they have at their disposal. The supposed intention behind this is to make the banking system safer and more stable, and has been stipulated by new international principles commonly referred to as Basel III. "There is a belief that the introduction of these new regulations will result in higher capital acquisition costs for banks," remarks Grzegorz Trawiński, director of Eurohypo bank in Poland. Consequently it might contribute to limiting the number of loans granted, including those related to the property market. Grzegorz Trawiński emphasises that according to the new Basel III regulations, banks will have to maintain their tier-one capital at a minimum level of 4.5 pct of their assets (having included the risk connected with the value of these assets). The level will be 2.5 pct higher than the current one. Furthermore, banks in the European Union will also have to maintain the ?capital conservation buffer' of 2.5 pct of the