Banks might have to operate under tighter rules in order to avoid another global financial slump.
- Some of the world’s largest economies are designing major regulations for banks that would ensure they are prepared to absorb large financial losses and avoid another financial meltdown.
- The negotiations, called Basel III, require banks to have secure and defined assets that they can hold against short- and long-term financial losses. But after a meeting on Sunday it seems that it could be years before these regulations are put into place.
- Banks are reluctant to adopt these regulations. They argue that they could slow the global recovery from the recent economic crises.
Facts & Figures
- If Basel III is put into place, the economic growth of the United States and Japan could fall 3% by 2015
Best Quote
“The quality and amount of capital in the banking system must be significantly higher to improve loss absorbency and resiliency.” - Mr. Draghi, Governor, Bank of Italy.