Global financial regulators on Sunday, September 12, reached consensus on new rules that were aimed at cutting “excessive risk-taking” and shoring up bank balance sheets.
The Basel III agreement, as it is known, requires banks to hold more and safer kinds of capital so that the risks they take in lending and trading are better offset. While some banks have protested that such rules will hamper their lending ability and hurt profitability, Jean-Claude Trichet, president of the European Central Bank and chairman of the committee of central bankers and bank supervisors that devised the rules, cited the agreement as “a fundamental strengthening of global capital standards.”
Representatives from such banks as the ECB and the U.S. Federal Reserve agreed to the new rules on Sunday in Basel, Switzerland. The agreement must still be presented to the Group of 20 and ratified before it takes effect.