Weber allays capital requirement fears

8th Sep 2010 09:14

Bundesbank president Axel Weber sought to allay fears about stricter requirements for banks' capital and cash reserves, saying the tougher rules should not hamper growth.Weber, a member of the European Central Bank's governing council, told a banking conference that regulators at the Bank for International Settlements (BIS), who are drafting the new requirements, known as Basel III, expect there to be an extended transition period that should ensure that banks have enough time to adapt while continuing to lend to business. Stricter capital standards "should not make the real economy suffer, as long as there are generous transition periods," Weber said. "Recent studies, which are based on a comprehensive cost-benefit analysis, show that the path we walk on isn't too risky," he told the forum of bankers in Frankfurt.The Basel Committee on Banking Supervision met yesterday to discuss higher capital requirements as part of the Basel III reforms, which are aimed at averting future banking crises. A BIS committee is set to unveil more about the proposed requirements next week.