Masters: Basel chief says bank tax premature

Summary of reforms

The Basel committee has proposed global reforms it expects to refine in July and adopt formally by the end of this year. The proposals include:

● Tighter rules for core tier-one capital, the building block of a bank’s reserves
● Raising the minimum ratio of tier-one capital to risk-weighted assets to a determined level. This is the main measure of bank safety
● Increasing capital requirements for trading books. This will make trading with the bank’s own money more expensive
● A new leverage ratio that would cap the size of a bank’s overall assets relative to its tier-one capital
● Two more liquidity rules. One would require banks to have enough easy-to-sell assets to survive 30 days of market chaos. The second, a “net stable funding ratio”, would require each bank to keep a minimum level of long-term funding relative to its assets
● Countercyclical capital buffers that would increase capital requirements at the height of a boom and limit a bank’s abilities to pay dividends and bonuses if its capital ratios became too low