BASEL (MNI) – New global rules to reinforce the volume and quality
of capital in the banking system will support the economic recovery and
will not dampen bank lending, European Central Bank Governing Council
member Erkki Liikanen said early Monday.
The new capital ratio requirements, known as Basel III, are
“ambitious but…also phased in in a way that doesn’t hamper the
recovery,” Liikanen told Market News International on the sidelines of a
meeting of the Bank for International Settlements here. “It supports the
stability of the financial system and also it supports sustained growth
in the medium and long-term.”
Liikanen added that the new rules are “a good solution for Europe.”
The Basel III agreement was reached late Sunday after months of
wrangling among the 27 nations that negotiated it. The key provision
requires banks to hold core tier 1 capital that is at least 7% of
risk-weighted assets — up from just 2% under the current rules. Core
tier 1 consists of common equity, and is considered the highest-quality
capital.
The new provision will be phased in between January 2013 and
January 2015.
[TOPICS: M$$EC$,MT$$$$,M$X$$$,MGX$$$,M$$CR$]
