November 06, 2010
G-20 aims for capital stabilizing regulation
The upcoming Seoul G-20 summit is expected to endorse new capital rules aimed at preventing financial sector crises from threatening the global economy, the government said yesterday.
The local summit preparation committee and the Financial Supervisory Service (FSS) said leaders from advanced and emerging economies, slated to meet next week in Seoul, will effectively seal the so-called Basel III requirement outlining tightened capital flow and liquidity rules.
The Basel III, reached at a meeting of top central bankers and state regulators in mid-September, focuses on building up the health of financial institutions and limit fallouts caused by the collapse of big institutions, like U.S. investment giant Lehman Brothers in late 2008, which has been blamed for triggering the recent worldwide economic crisis.
The measures, to be implemented over the next decade, may affect lending to businesses and ordinary consumers, but make it less likely for governments to bail out troubled financial institutions.
“The summit will allow leaders to review and effectively sign off on the detailed regulatory programs,” a preparation committee official said, adding that there is almost no discord on tightening capital flow rules among the G-20 countries that account for roughly 85 percent of the world’s gross domestic product.
He added that compared to other agendas, agreements that can be reached when leaders meet next Thursday and Friday will be very detailed.
Leaders at the Seoul summit plan to call for mandatory reserves of lenders to be gradually raised from 4 percent at present to 6 percent by 2019. Banks will also be required to maintain emergency reserves, referred to as the “capital conservation buffer,” of 2.5 percent that can be used to mitigate the impact of unforeseen emergency situations.
Overall, lenders will be required to have emergency reserves equivalent to 8.5 percent of their assets by the end of the decade.
In addition, the G-20 will support moves to introduce the short-term liquidity coverage ratio (LCR) from 2015 and the longer-term net stable funding ratio (NSFR) three years later.
http://joongangdaily.joins.com/article/view.asp?aid=2928042
G-20 aims for capital stabilizing regulation
The upcoming Seoul G-20 summit is expected to endorse new capital rules aimed at preventing financial sector crises from threatening the global economy, the government said yesterday.
The local summit preparation committee and the Financial Supervisory Service (FSS) said leaders from advanced and emerging economies, slated to meet next week in Seoul, will effectively seal the so-called Basel III requirement outlining tightened capital flow and liquidity rules.
The Basel III, reached at a meeting of top central bankers and state regulators in mid-September, focuses on building up the health of financial institutions and limit fallouts caused by the collapse of big institutions, like U.S. investment giant Lehman Brothers in late 2008, which has been blamed for triggering the recent worldwide economic crisis.
The measures, to be implemented over the next decade, may affect lending to businesses and ordinary consumers, but make it less likely for governments to bail out troubled financial institutions.
“The summit will allow leaders to review and effectively sign off on the detailed regulatory programs,” a preparation committee official said, adding that there is almost no discord on tightening capital flow rules among the G-20 countries that account for roughly 85 percent of the world’s gross domestic product.
He added that compared to other agendas, agreements that can be reached when leaders meet next Thursday and Friday will be very detailed.
Leaders at the Seoul summit plan to call for mandatory reserves of lenders to be gradually raised from 4 percent at present to 6 percent by 2019. Banks will also be required to maintain emergency reserves, referred to as the “capital conservation buffer,” of 2.5 percent that can be used to mitigate the impact of unforeseen emergency situations.
Overall, lenders will be required to have emergency reserves equivalent to 8.5 percent of their assets by the end of the decade.
In addition, the G-20 will support moves to introduce the short-term liquidity coverage ratio (LCR) from 2015 and the longer-term net stable funding ratio (NSFR) three years later.
http://joongangdaily.joins.com/article/view.asp?aid=2928042
