The Financial Stability Board, a panel made up of central bankers, finance officials and top regulators from the world’s largest economies, was yesterday expected to announce proposals that would double the amount of money that large banks would be required to have on hand to absorb losses.
The purpose of the new rules, which would not take effect until 2019 at the earliest, is to curtail risk-taking and protect taxpayers from having to bail out large banks in times of crisis, as happened on a grand scale during the financial crisis in 2008.
The new proposals, which have been hinted at for several weeks, aim to shift the burden of bank failures so that it falls more squarely on bank investors and the banks themselves. However, the proposals are certain to face stiff opposition from the banking industry, which is likely to argue that the rules would force banks to curb lending, hurting economic growth. Banks and other interested groups have until Feb. 2 to submit comments on the rules.
The rules would allow large banks to be shut down “without recourse to public subsidy and without disruption to the wider financial system,” Bank of England Governor and Financial Stability Board chairman Mark Carney said in a statement.
The rules would apply only to so-called global systemically important banks — banks that are so big and interconnected that their problems can create economic and financial havoc. Banks in emerging markets would initially be exempt from the rules.
If adopted, the rules would probably have the most impact on lenders like Deutsche Bank in Germany or BNP Paribas in France, which use a high proportion of borrowed money to do business. These banks might need to divert profit or sell new shares to raise more capital, or else jettison some of their most risky activities.
The new rules would have less impact in the US, where regulators have already approved similar standards for the eight largest banks that take effect in 2018.
The board has a mandate from the G20 to develop guidelines that serve as a template for national regulations. The rules formulated by the board are not obligatory for individual countries, but governments face considerable international pressure to adopt them.
The board is based at the Bank of International Settlements, which provides financial services to the world’s central banks, in Basel, Switzerland. The board works closely with the Basel Committee on Banking Supervision to set global standards for bank regulation.
The rules will be formally presented to leaders of the G20 nations when they meet in Brisbane, Australia, on Nov. 15 and 16.
Regulations created under the auspices of the G20, known as the Basel III rules, are being enacted around the world and are expected to make banks safer, albeit less profitable.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last