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Banks to be forced to bolster liquid assets: FT
October 10, 2011 / 1:45 AM / 6 years ago

Banks to be forced to bolster liquid assets: FT

LONDON (Reuters) - Global banking regulators will press ahead with the first worldwide effort to force banks to hold more liquid assets, the chairman of the Basel Committee on Banking Supervision said in an interview with the Financial Times on Monday.

Stefan Ingves, the head of Sweden's Central Bank, speaks to Reuters reporters during an interview in Stockholm June 16, 2011. REUTERS/Bob Strong

Stefan Ingves, who also heads the Swedish central bank, said the Basel group plans to put uniform implementation of the Basel III reforms at the top of its agenda.

The measures, which will also force banks to cut back on short-term funding, have come under scrutiny from some of the 27 member countries who say the rule changes could damage the broader economy.

The reforms, which were agreed to by the member states, will force banks to hold more top-quality capital against unexpected losses, but there are rising concerns that some countries will not stick to the agreement.

“It is going to be all about implementation in as uniform a way as possible. Balkanisation of the rules over the long term is not in anyone’s interest,” Ingves said.

The FT reported that the committee plans to publish “heat maps” that show which countries are in compliance with the measures. The committee will also send out teams of experts to look at whether each country’s implementation laws and regulations are in accordance with the agreement.

The Basel group is still hammering out the details on two liquidity rules: the liquidity coverage ratio, which would require banks to hold enough liquid assets to survive a 30-day crisis; and the net stable funding ratio, which would force financial institutions to use more long-term funding.

Reporting by Stephen Mangan; Editing by Matt Driskill

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