US
To Push For Global Capital Rules
The US is preparing to pivot from domestic
regulatory reform to a push for a tough new
international capital regime after the
weekend’s G20 and International Monetary
Fund meetings glossed over differences
between leading economies.
Tim Geithner, US Treasury secretary, met
Mario Draghi, chairman of the Financial
Stability Board, on Sunday to discuss the
contours of a system that would decide the
safety and profitability of banks for
decades to come and could eclipse the
arguments over bank taxes and regulation.
But the different positions of senior
central bank and government officials from
several countries expressed to the Financial
Times on the sidelines of the G20 meetings
in Washington suggested that a final
international agreement remains a challenge.
The G20 communiqué on Friday said: “We
recommitted to developing by end-2010
internationally agreed rules to improve both
the quantity and quality of bank capital and
to discourage excessive leverage.” But
participants said little time was spent on
the issue and that officials were gearing up
for a battle at the June meeting over the
direction of the new standards, which would
prevent banks from relying on short-term
funding and disqualify some assets from
counting towards core regulatory capital,
the highest-quality loss-absorbing part of
the capital structure.--
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