STRICTER capital and liquidity requirements for banks will help bolster the global financial system against possible future crises and ultimately save taxpayer money, an international banking official said overnight.
Since the outbreak of the global crisis in 2008, the Group of 20 leading advanced and emerging nations has been working to coordinate polices to revive economic growth and shore up the world financial system through stronger capital and liquidity regulations.
The Basel, Switzerland-based Financial Stability Board (FSB) and the Basel Committee on Banking Supervision have been working on a package of proposed reforms expected to be presented to G-20 leaders for consideration at a summit in Seoul next month.
The Basel, Switzerland-based Financial Stability Board (FSB) and the Basel Committee on Banking Supervision have been working on a package of proposed reforms expected to be presented to G-20 leaders for consideration at a summit in Seoul next month.
The FSB and the Basel Committee are holding separate meetings this week in the South Korean capital ahead of a gathering of G-20 finance ministers and central bank governors later this week and the Seoul summit on Nov 11-12.
"Higher levels of capital combined with the global liquidity framework will substantially reduce the probability and severity of banking crises in the future," Nout Wellink, head of the Basel Committee, said overnight after its meeting attended by dozens of central bank and banking supervisory officials from 27 countries.
"And this helps to safeguard financial stability and economic growth and to reduce the exposure to the public sector and taxpayers," he added. Mr Wellink is also chief of the central bank of the Netherlands.
Last month, the oversight body of the Basel Committee agreed for banks to significantly increase their capital reserves by the end of this decade, seen as a way to bolster bank finances and control excessive risk-taking - two problems identified as major factors behind the global financial meltdown.
Proposed ideas since the advent of the crisis include not only stricter capital requirements but also enhanced supervision of large institutions which, if they failed, could potentially destabilise the entire financial system as happened in 2008 with the collapse of US investment bank Lehman Brothers Holdings.
The G-20 has taken over from the Group of Seven advanced nations as a key priorities-setting forum and steering committee for the global economy since the financial crisis.
It includes both advanced economies such as the US, Germany, Japan and France as well as emerging ones like China, Turkey, Brazil and India.
South Korea is the chair country for this year's meetings.
"And this helps to safeguard financial stability and economic growth and to reduce the exposure to the public sector and taxpayers," he added. Mr Wellink is also chief of the central bank of the Netherlands.
Last month, the oversight body of the Basel Committee agreed for banks to significantly increase their capital reserves by the end of this decade, seen as a way to bolster bank finances and control excessive risk-taking - two problems identified as major factors behind the global financial meltdown.
Proposed ideas since the advent of the crisis include not only stricter capital requirements but also enhanced supervision of large institutions which, if they failed, could potentially destabilise the entire financial system as happened in 2008 with the collapse of US investment bank Lehman Brothers Holdings.
The G-20 has taken over from the Group of Seven advanced nations as a key priorities-setting forum and steering committee for the global economy since the financial crisis.
It includes both advanced economies such as the US, Germany, Japan and France as well as emerging ones like China, Turkey, Brazil and India.
South Korea is the chair country for this year's meetings.
From correspondents in Seoul
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