Basle III

ZURICH, September 12, 2010 (AFP) – Banks will be required to lift their reserves substantially under “landmark” new rules drawn up Sunday by central bankers and regulators seeking to prevent a repeat of the recent financial crisis. The new regulations, called Basel III, would force banks to more than triple their current reserves and would be phased in from 2013, said a statement issued by the Bank for International Settlements.

“The agreements reached today are a fundamental strengthening of the global capital standards,” said European Central Bank chief Jean-Claude Trichet, who chairs the group of regulators at the meeting in northern Switzerland.

“Their contribution to long-term financial stability and growth will be substantial. The transition arrangements will enable banks to meet the new standards while supporting the economic recovery,” he added.

Under the new rules to be phased in from 2013, banks would be required to hold more reserves by January 1, 2015, with the so-called core Tier 1 capital raised to 4.5 percent from 2.0 percent at the moment.

In addition, banks would be required by January 1, 2019 to set aside an additional buffer of 2.5 percent to “withstand future periods of stress”, bringing the t