Basel III

Asia to trade views on Basel III

Non-G20 nations gather in Hong Kong to discuss global banking regulation

PUBLISHED : Wednesday, 16 January, 2013, 12:00am
UPDATED : Wednesday, 16 January, 2013, 3:41am

The Institute of Global Economics and Finance will host a three-day advanced programme for non-G20 central bankers and regulators on the Basel III agreements at the Chinese University this week.

The featured speaker, Professor Liu Ming Kang, former chairman of the China Banking Regulatory Commission, said the main goal of the programme was to trade knowledge about Basel III between non-G20 regions and convey the message that there was no universal fit for all nations.

This is the first time an international programme has been organised for non-G20 members, highlighting the agreement's growing complexity.

The Basel agreement is a set of rules designed to make global banking safer. Following the 2008 global financial crisis, the original Basel agreements were revised to include a multitude of new rules running up to 509 pages and 78 calculus equations.

Global central bank chiefs had just a few weeks ago agreed to delay a watered down bank liquidity rule crucial to safeguarding their clients' money in times of crisis.

The rule forces banks to hold enough liquid assets to survive a 30-day credit squeeze.

By contrast, existing measures require banks to keep their outstanding loans no higher than 75 per cent of their outstanding deposits at the end of each month.

Liu said the decision delay adoption of the new liquidity rule until 2019 was due to much-needed research and discussion on how changes would be tailored for China's economy.

Liu also stressed that in order to meet the requirements of Basel III, "banks in China will have to restructure their growth model and take into account issues of efficiency".

With global discussion on regulation still being led by Europe and the United States, the advanced programme might be just what was needed to encourage Asia to speak with a cohesive voice and understand what worked for them.