The Hindu : Business : Basel unveils new proposals

Online edition of India's National Newspaper
Wednesday, Apr 13, 2005

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Business

Basel unveils new proposals

GENEVA, APRIL 12. The Basel Committee of banking regulators on Monday unveiled a list of proposals that will complete unfinished business left over from last year's landmark rewrite of capital safety rules.

The proposals, which come as banks struggle to implement the complex regulations of the Basel Accord, will govern how banks allot capital as a buffer against surprise shocks in trading activities and in extreme circumstances when both creditors and credit guarantees default simultaneously.

"The proposals are intended to improve the sensitivity of the capital rules to the underlying economic risks associated with such exposures in a manner that is compatible with the Basel Committee's revised capital framework,'' the committee said in a statement. The trading rule proposals were reached in agreement with the International Organization of Securities Commissions (IOSCO). The Basel Committee said it would accept public comment on the new proposals until May 27 and that it planned to release the final version of the rules later in the summer.

Basel regulators have also launched their fifth attempt to measure how the new rules will affect banks' capital requirements. Once known, the results of the so-called Quantitative Impact Study could allow the committee to lower the overall capital requirements.

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