Banks face tougher capital reserve rules
Posted by | Posted in Business News | Posted on 13-09-2010
BASEL, Sweden, Sept. 12 (UPI) — Banks would have to triple their capital reserves under rules approved in Switzerland by top regulators of the world’s major economic powers Sunday.
Central bankers and regulators from 27 nations announced an accord on the rules, known as Basel III, in the Swiss city Sunday evening, The New York Times reported. Banks would be required to increase the amount of common equity they hold to 7 percent of assets from 2 percent, one of a package of measures meant to avert financial crises like the collapse of 2008.
“The agreements reached today are a fundamental strengthening of global capital standards,” Jean-Claude Trichet, president of the European Central Bank and chairman of the group, said. “Their contribution to long-term financial stability and growth will be substantial.”
Before the rules can become binding, the recommendations by the group, which includes Ben S. Bernanke, chairman of the U.S. Federal Reserve, are subject to ratification by the G20 nations and then enactment by individual nations. The group set a deadline of Jan. 1, 2013, for member nations to put them into place.
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