New Basel Rules Could Spark Credit Crunch

Industry officials fear that new Basel rules could shrink bank profit margins and make credit tighter and more expensive for businesses and consumers, reports the Wall Street Journal.

 

The Journal notes that the Basel Committee on Banking Supervision is working on on how much to increase the cushions of capital that banks are required to hold in reserve. To reach a compromise on what constitutes capital under the new rules, officials this week are moving away from disqualifying certain assets now counted as capital and instead placing a ceiling on how much of these can be tallied.

 

While regulators and central bankers are moving toward less stringent rules than initially proposed, the new Basel rules would still be stiffer than existing standards, notes the Journal.

 

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