Question 4: Under the Basel 3 approach to regulating capital: a. b. 95 Banks must hold more capital against their assets, thereby decreasing the size of their balance sheets and their ability to leverage themselves. Banks will face higher equity requirements inclusive of a new capital conservation buffer which may in turn constrain their ability to pay dividends and otherwise deploy capital during times of nancial stress. It is envisaged that greater nancial stability will help produce more stable economic growth albeit growth may in part be restrained by stricter capital regulations that hinder the provision of credit. None of the answers. All of the answers