LONDON Jan 17 New global rules forcing banks to
hold more capital and cash to shield taxpayers and make the
financial system safer won't achieve their aim, a UK regulatory
policymaker warned on Thursday.
Robert Jenkins, a member of the Bank of England's (BoE)
Financial Policy Committee, said the Basel III accord, agreed by
world leaders (G20) for implementation over six years from this
month, does not go far enough.
Basel III requires banks to more than triple the amount of
capital they hold and have separate cash buffers so taxpayers
are less likely to have to rescue them again should another
financial crisis occur.
"Will Basel III do the job? My personal opinion is that it
won't," Jenkins told reporters.
He said his view was echoed by a growing body of academics
and others on the FPC such as Andrew Haldane, the Bank's
director of financial stability.
Haldane and other regulators such as Thomas Hoenig,
vice-chairman of the U.S. Federal Deposit Insurance Corp, think
the Basel accord is too complicated to work.
The FPC sets the tone and direction of regulation in Britain
and from April, the BoE becomes the main regulator for lenders.
Jenkins, a former banker and asset manager, said the Jan. 6
decision by the Basel Committee of regulators to alter one of
the Basel III rules forcing banks to build up cash buffers, did
not amount to a loosening.
"I don't see any evidence for it at the moment," Jenkins
said. "I am more encouraged by the greater frequency of tougher
comment than in the past."
"This is a long game and it's not over yet."
The European Union and United States have yet to introduce
formal rules to implement Basel - eventhough all of the big
banks on their turf already meet or exceed the capital they are
required to hold by 2019.