BERLIN (AP) — International banking regulators agreed Sunday on global rules meant to ensure banks keep enough cash in hand to survive future market crises, and gave banks until 2019 to comply fully.
The rules will require banks in future to hold enough cash, and assets such as equities, corporate and government bonds that can easily be sold, to tide them over during an acute 30-day crisis.
The body that oversees the Basel Committee on Banking Supervision, which sets international rules, said Sunday that they will have to hold 60 percent of that amount when the rules start being phased in on Jan. 1, 2015; that will increase by 10 percentage points every year until the standards take full effect at the beginning of 2019.
The oversight body's head, Bank of England governor Mervyn King, said after regulators met in Basel, Switzerland, that the timeframe ensures the new standards "will in no way hinder the ability of the global banking system to finance the recovery." The hope is that it will prevent lenders from becoming over-reliant in future on help from central banks, which have stepped in over recent years to keep the financial system flush with cash.