Leaders of the Group of 20 (G-20) have endorsed the so-called Basel III regulations, which raise the amount of risk-free capital that banks must hold to 7% of assets from as little as 2% now, reports the New York Times.
The Basel III rules will be phased in from the beginning of 2013 to the end of 2018. They also contain provisions designed to ensure that banks have stable sources of refinancing and are not vulnerable to the kind of freeze in interbank lending that occurred in 2008.
“The leaders reaffirmed their commitment to strengthening the financial regulatory system as part of their broader goal of strong and sustainable growth,” the G-20 says in a statement obtained by the newspaper.
According to the Times, the leaders also endorsed yet more stringent rules for financial institutions that are so big or so interconnected they could cause massive collateral damage if they run into problems.
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