“Global authorities have settled on their punishment for banks’ role in the financial crisis: a future encumbered by the burden of significantly heavier reserves that will impede the impulse to seek profit through excessive risk taking. Senior regulators from 27 countries agreed on Sunday at a meeting in Basel, Switzerland, that lenders should be forced to retain common equity equal to at least 4.5 per cent of their assets, compared with the current standard of 2 per cent. On top of that, the governing body of the Basel Committee on Banking Supervision said banks should be directed to add an additional 2.5 per cent buffer so that core reserves, which back everyday lending, aren’t reduced during an expected economic or financial shock.” Read more.
“Regulators Tighten Bank Capital Rules”
Kevin Carmichael
The Globe and Mail, September 12, 2010.
Image by Francesco Marino / FreeDigitalPhotos.net.
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