PARIS - Agence France-Presse
Regulators are set to show greater flexibility in applying a new regulation designed to ensure that banks have enough funds on hand in case of a crisis, the Wall Street Journal reported yesterday.
Banks and regulators have been discussing for months how to apply the rule, the Basel III standards drafted following the 2008 global financial crisis, requiring banks have 30 days of liquidity in case of markets freeze up. The Wall Street Journal cited regulators as saying they were now willing to include gold and certain stocks in addition to cash and government bonds in what is considered as sufficiently liquid assets in case markets experience another crisis.
Officials told the newspaper that the move was not a relaxation owing to the current crisis in the eurozone, but taken following further studies into how the new rule would affect banks.
“The thinking has evolved in the past few months,” the Wall Street Journal quoted as saying a senior regulator involved in the talks. Negotiators were looking at how to make the requirements “more realistic”, he added. The Basel III regulations, which gradually into effect beginning next year, banks must also significantly increase their capital-to-assets ratios to strengthen their ability to withstand future financial crises. The EU banking regulator has pushed up the date for the attaining the core capital ratio to the end of June and raised the bar to 9 percent, which European banks have said has forced them to sell assets and restrict lending.