Following the 2008 – 2009 financial crisis, the Basel Committee on Banking Supervision (BCBS) extensively revised the current capital adequacy guidelines. The resulting capital adequacy framework is called Basel III. In a paper published by KPMG titled Basel III: Issues and Implications, the Basel III proposal had two main objectives: Strengthen global capital and liquidity regulations with the aim of promoting a more resilient banking sector Improve banking sector capacity to absorb shocks resulting from financial and economic stress, which, in turn, would reduce the risk of spillovers from the financial sector to the real economy. The KPMG article also claims that the Basel Three proposals are divided into three main parts to represent the main focus areas (pillars). These are capital reform, liquidity reform and other elements related to the overall improvement of the stability of the financial system. The area focused on capital reforms includes capital quantity and quality, comprehensive risk coverage, leverage ratio, and the initiation of both capital conservation and a countercyclical buffer. Liquidity reforms include both short-term and capital ratios, while other elements address systemic risk and interconnectedness. Under this pillar issues of concern include capital incentives for using CCPs for OTC, higher capital for systemic derivatives and inter-financial exposures. Contingent capital and capital surcharge for systemic banks are also part of this pillar. Speech at the ninth high-level meeting for the Middle East and North Africa region jointly organized by the Basel Committee on Banking Supervision, the Financial Stability Institute and the Arab Monetary Fund (AMF) in Abu Dhabi, the Emirates United Arab... half paper... rms, which effectively required asset fire sales, exacerbated the fall." Schwarcz (2010) makes an important point that merits further discussion. He notes that although governments have attempted to introduce measures to manage systemic risk, the focus tends to be on institutions and not on markets. This is also supported by Schwerter (2011) who argues that, with regards to systemic risk, the Basel Committee. III did not provide adequate coverage on the regulation of systemic risk. He argues that the Basel III proposals have a major flaw, namely the non-existent pricing of systemic risk. He notes that “the committee's proposal for systemically important banks to implement loss-absorbing capacity above the standard through a combination of capital supplements, contingent capital and debt security, this absolutely mandatory requirement is not addressed. THE