Central banks regulate banking industry
The world’s leading central bank governors have agreed on a package of measures to strengthen and regulate the banking industry in the wake of the financial crisis.
A statement released by the Basel-based Bank for International Settlements on Sunday said the measures should “substantially reduce the probability and severity of economic and financial stress.”
European Central Bank chief Jean-Claude Trichet, who presided over the meeting said the agreements among 27 major countries of the world are “essential as they set the new standards for banking regulation and supervision at the global level.”
The new measures have been designed to encourage banks to bolster capital and remedy flaws exposed by the collapse in credit and financial markets last year.
“Banks will be required to move expeditiously to raise the level and quality of capital to the new standards, but in a manner that promotes stability of national banking systems and the broader economy,” the statement said.
The central bankers also endorsed the principle of a minimum global standard to fund liquidity, as well as a framework to oblige banks to build permanent “countercyclical” capital buffers that can be used during periods of financial turmoil.
A firm date is yet to be set for implementation of the package, which will be fleshed out over the coming months.