Banking regulators want to strengthen rules
Banks may face more supervision following the credit crunch
Also In The News
|
Jan Vennegoor of Hesselink scored a last-minute header to help Celtic win the Old Firm derby against Rangers 2-1 at Parkhead. |  |
Thursday, 17, Apr 2008 04:13
Banking regulators have proposed strengthening rules to make the system more resilient to financial shocks.
The Basel Committee, which sets global standards for banking regulation, wants banks to set aside more capital against complex structured credit products and more supervision.
The proposals would be implemented by national regulators, but the committee added the changes would be introduced slowly to avoid making the situation worse.
In addition, the committee said it supported the Financial Stability Forum's Working Group on Market and Institutional Resilience, which recently released its report to the G7 finance ministers and central bank governors at a meeting in Washington.
The forum proposed better oversight of financial institutions and enhanced transparency in the system.
Banks affected by the credit crunch are under pressure to come clean over their losses, as US investment firm Merrill Lynch today revealed a first quarter loss on write-downs of $6 billion (£3 billion).
"A resilient banking system is central to sound financial markets and growth," said Nout Wellink, chairman of the Basel Committee and president of the Netherlands Bank.
"Supervisors cannot predict the next crisis but they can carry forward the lessons from recent events to promote a more resilient banking system that can weather shocks, whatever the source.
"The key building blocks to core bank resiliency are strong capital cushions, robust liquidity buffers, strong risk management and supervision, and better market discipline through transparency," Mr Wellink said.
Gordon Brown traveled to the US to urge banks to be transparent about their exposure to the subprime market this week, as investors fear more losses are yet to come.