Cairns, Australia: The G20 nations on Sunday said they were working on a plan to “increase consistency” in how banks apply capital rules meant to protect the global economy after the financial crisis.
The group of 20 of the world’s biggest economies said the proposal was set in motion for their Brisbane leaders’ summit in November and would further strengthen existing financial regulatory reforms.
“Work is underway on a plan that will increase consistency in banks’ application of the strengthened Basel III rules on capital,” finance ministers and central bankers said in a communique after a weekend meeting in Cairns.
They reaffirmed their commitment to tackle the risks posed by “too big to fail” banks, and said the Financial Stability Board would put forward a proposal outlining further details on lenders’ capital buffers, also described as total loss-absorbing capacity.
“I am pleased that this G20 meeting... has taken the next step towards eliminating the risk that any firm is ‘too big to fail’ by coming to a broad consensus on total loss-absorbing capacity,” US Treasury Secretary Jack Lew said in a press conference.
“This builds on our efforts to strengthen bank capital and liquidity, and reduce leverage and shed light on opaque over-the-counter derivative markets.
“This achievement represents an important milestone in the efforts to end ‘too big to fail’.”
The G20 nations also welcomed plans by the Financial Stability Board, which was set up after the global economic crisis, to prepare annual reports from 2015 on the implementation and impact of regulatory reforms.
At the November summit, the board is also set to present its proposals on how to manage “shadow banking” by non-regulated lenders, and ways to address potential systemic risks they might pose.
