By Doug Alexander
The Group of 20 countries said banks need to raise capital “significantly higher” in order to avoid a repeat of the global financial crisis, while giving lenders more flexibility to implement the changes.
Countries should adopt the new standards by the end of 2012, and banks will be allowed to phase in capital increases during a transition period, according to a draft of the G-20 statement sent to reporters today in Toronto.
Banks will have to increase common equity as a percentage of their so-called Tier 1 capital to allow them to withstand another crisis without significant government support, the statement said. The capital increases can be phased in over a timeframe that respects each country’s circumstances, and is “consistent with sustained recovery and limits market disruption.”
Continue reading G-20 Calls for ‘Significantly’ Higher Bank Capital
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