Monday, September 13, 2010

Global banking rules would seek to reduce risk

Banks must keep more cash on hand

Under current rules, banks must hold back at least 4% of their balance sheet to cover their risks. This mandatory reserve — known as Tier 1 capital — would rise to 4.5% by 2013 and reach 6% in 2019. In addition, banks would be required to keep an emergency reserve of 2.5%. In some banks are protesting that the proposed rules may dampen the recovery by forcing banks to reduce lending that fuels economic growth.

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