WASHINGTON, September 23 (Global Risk Regulator) – Meeting amid renewed fears of financial crisis, G20 finance ministers pledged yesterday to fully implement the tough bank capital and liquidity rules embodied in the Basel III reform package.
The finance ministers of the Group of Twenty (G20) largest economies, along with their central bankers, met ahead of the International Monetary Fund’s annual meeting which starts today. Meanwhile, the Basel Committee of global banking supervisors that devised the Basel III package meets next week to agree controversial proposals for a capital surcharge on the world’s biggest banks.
The finance ministers’ meeting was mainly preoccupied with the economic and financial turmoil stemming from the European sovereign debt crisis. Their communiqué was centrally concerned with reassuring markets that they would take all necessary measures to preserve financial stability.
The ministers said as part of their efforts they would ensure “that banks are adequately capitalised and have sufficient access to funding to deal with current risks and that they fully implement Basel III along the agreed timelines.”
Separately, Basel Committee secretary general Stefan Walter said global banking supervisors are committed to reaching a deal on a capital surcharge for banks next week.
The Basel regulators are aware of industry concerns and sought to be balanced and fair to all jurisdictions, Walter told Reuters news agency.
JPMorgan Chase & Co’s chief executive Jamie Dimon has called the proposals anti-American. The Institute of International Finance (IIF), the influential lobbying group that represents the world’s biggest financial institutions, has called for the withdrawal of the proposed surcharges on the grounds that they are misguided as a policy and seriously flawed methodologically.
The Basel regulators are meeting to agree on plans to make big banks hold up to 2.5% extra capital, a move regulators say will reduce the risk of their failing. A final decision will be made by G20 leaders at their November summit in the French Mediterranean resort of Cannes.
“There is a very strong commitment to produce a strong framework in time for the G20 leaders’ summit,” Walter said.
“The capital surcharge is not one size fits all,” he said. “It is a framework that will be based on a clearly defined and transparent set of measures that determine which institutions are globally systemic banks, and if they meet that designation, what their capital surcharge should be.”
David Keefe (email@example.com)