Basel Committee agrees higher global minimum capital standards

The Group of Governors and Heads of Supervision, the governing body of the Basel Committee on Banking Supervision, yesterday announced a substantial strengthening of existing capital requirements and fully endorsed the agreements it reached in July this year. Transitional arrangements were also published (here, pdf). Further information is available in a press release published yesterday - see here - from which this short summary is taken:

The Committee's package of reforms will increase the minimum common equity requirement from 2% to 4.5%. In addition, banks will be required to hold a capital conservation buffer of 2.5% to withstand future periods of stress bringing the total common equity requirements to 7%. This reinforces the stronger definition of capital agreed by Governors and Heads of Supervision in July and the higher capital requirements for trading, derivative and securitisation activities to be introduced at the end of 2011".