Central banking chiefs and regulators from 27 of the world's leading economies agreed on tougher new rules for the running of banks Sunday, in a bid to make the industry more resistant to crises, the German Press Agency dpa learned from informed sources. While details of the exact deal have yet to emerge from the Basel Committee on Banking Supervision meeting in the Swiss city, banks are expected to be required to hold progressively more capital as a ratio of their assets, under rules to begin in 2013 and to be phased in over a 5-10 year period. The so-called core tier one ratio, which is a crucial measure for the health and shock resistance of a bank, is currently at 2 per cent. The committee has been working on the assumption this level would rise to 4.5 per cent. The new agreement comes almost two years exactly after the collapse of United States investment bank Lehman Brothers pushed the world into its deepest recession since the Great Depression of the 1930s. The aim of regulators has been to ensure that banks do not cause a similar crisis again. Once approved, the reforms are then to be considered by the leaders of the Group of 20 (G20) major economies at their November summit in Seoul. Much of the resistance to tougher capital standards has come from French and German banks, which argue that the new rules would impose extra burdens on lenders when they are still recovering from the financial crisis. The Basel Committee's guidelines are not binding, but previous agreements on capital standards have been widely adopted as a seal of approval recognised by financial institutions worldwide.
