TOKYO (Nikkei)--Central bankers and finance regulators from the world's 20 leading economies met in Paris on Monday to set new rules for about 30 of the world's biggest financial institutions.
Once the rules are in place, institutions that wield a major influence on global finance would have to hold more capital and put forward crisis-management plans. Should one of them fail despite these precautions, its assets would be instantly frozen worldwide.
The Group of 20's Financial Stability Board is seeking stronger international cooperation to prevent chain-reaction panics like the one that followed the 2008 collapse of Lehman Brothers.
In an effort to learn from that crisis, the G-20 has been moving toward rebuilding financial regulation.
The report from Monday's FSB meeting will go before G-20 leaders at their summit in Cannes this November.
The proposed rules are aimed at preventing financial chaos without massive government bailouts for "too-big-to-fail" firms, which triggered backlashes from U.S. and European taxpayers in the recent crisis.
A central feature is the requirement for crisis-management plans that lay out procedures for selling assets, raising funds and other steps to stave off collapse. All of this is supposed to be done without government support. Regulators will have copies of these plans and keep a closer watch on these firms.
Another key element is the creation of special rules for winding down troubled institutions whose failure could roil the global financial system, including brokerages and hedge funds.
The capital surcharge to be borne by globally significant banks would vary according to their systemic importance, ranging from 1% to 2.5%. Japan's three megabanks are expected to fall into this group. The surcharges would take effect incrementally starting in 2016.
Source: http://e.nikkei.com
Once the rules are in place, institutions that wield a major influence on global finance would have to hold more capital and put forward crisis-management plans. Should one of them fail despite these precautions, its assets would be instantly frozen worldwide.
The Group of 20's Financial Stability Board is seeking stronger international cooperation to prevent chain-reaction panics like the one that followed the 2008 collapse of Lehman Brothers.
In an effort to learn from that crisis, the G-20 has been moving toward rebuilding financial regulation.
The report from Monday's FSB meeting will go before G-20 leaders at their summit in Cannes this November.
The proposed rules are aimed at preventing financial chaos without massive government bailouts for "too-big-to-fail" firms, which triggered backlashes from U.S. and European taxpayers in the recent crisis.
A central feature is the requirement for crisis-management plans that lay out procedures for selling assets, raising funds and other steps to stave off collapse. All of this is supposed to be done without government support. Regulators will have copies of these plans and keep a closer watch on these firms.
Another key element is the creation of special rules for winding down troubled institutions whose failure could roil the global financial system, including brokerages and hedge funds.
The capital surcharge to be borne by globally significant banks would vary according to their systemic importance, ranging from 1% to 2.5%. Japan's three megabanks are expected to fall into this group. The surcharges would take effect incrementally starting in 2016.
Source: http://e.nikkei.com
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