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| Banks win more flexible liquidity rules from Basel | Banks win more flexible liquidity rules from Basel |
| (35 minutes later) | |
| Internationals financial regulators have eased rules on minimum quantities of cash and liquid assets all banks must hold, set to take effect in 2015. | Internationals financial regulators have eased rules on minimum quantities of cash and liquid assets all banks must hold, set to take effect in 2015. |
| The agreement, by the body that oversees the Basel Committee on Banking Supervision, is an attempt to make banks less vulnerable to runs. | The agreement, by the body that oversees the Basel Committee on Banking Supervision, is an attempt to make banks less vulnerable to runs. |
| The new "liquidity coverage ratio" will be phased in from 2015 and take full effect four years later. | The new "liquidity coverage ratio" will be phased in from 2015 and take full effect four years later. |
| Analysts say the rules just announced are more flexible than a draft version. | Analysts say the rules just announced are more flexible than a draft version. |
| The new rules are part of efforts to prevent financial shocks such as those prompted by the 2007 run on Northern Rock in the UK, or by the 2008 collapse of Lehman Brothers in the US. | The new rules are part of efforts to prevent financial shocks such as those prompted by the 2007 run on Northern Rock in the UK, or by the 2008 collapse of Lehman Brothers in the US. |
| Perhaps the most striking characteristics of today's agreement - which amends a draft first published in 2010 - is that banks will be allowed to include corporate bonds, some shares and high-quality residential mortgage backed securities in their permitted stocks of liquid assets. | |
| This goes against the grain of central banking and regulatory orthodoxy. In particular, the inclusion of mortgage-backed securities will be seen by some as odd, since these proved to be wholly illiquid and unsellable in the summer of 2007. | |
| Banks will have to hold enough cash and easily sellable assets, to tide them over during an acute 30-day crisis. | Banks will have to hold enough cash and easily sellable assets, to tide them over during an acute 30-day crisis. |
| The final version of the rules - updating a draft version put forward more than two years ago - allows banks to hold allowing a broader range of eligible assets and gives them more time to comply. | |
| The head of oversight body's head, Mervyn King, said the timeframe ensures the standards "will in no way hinder the ability of the global banking system to finance the recovery". | |
| The Basel Committee brings together representatives regulators from 27 nations. |