Newspaper article International Herald Tribune

Japan and U.S. Lag on Bank Rules ; Use of Basel Regulations Also Delayed in Europe, G-20 Leaders Are Warned

Newspaper article International Herald Tribune

Japan and U.S. Lag on Bank Rules ; Use of Basel Regulations Also Delayed in Europe, G-20 Leaders Are Warned

Article excerpt

Regulators and central bankers from the world's largest countries gave poor marks to the regions that have been most vulnerable to banking crises in recent years.

Despite fresh reminders of the fragility of the financial system, the United States, the European Union and Japan are behind schedule on implementing measures adopted as part of an international effort to avert future banking crises, a high-level panel said.

In a report Monday to leaders of the Group of 20 industrialized and developing nations before their summit meeting in Mexico next week, regulators and central bankers from the world's largest countries gave poor marks to the regions that have been most vulnerable to banking crises in recent years.

The United States ranked behind China, India and Italy, among other countries, in the progress made toward implementing rules known as Basel 2.5, which are intended to prevent banks from underestimating the riskiness of their activities, according to the report by the Basel Committee on Banking Supervision. The United States, as well as Japan and Europe, also received poor grades for the efforts made toward implementing rules known as Basel III, which stem from the financial crisis that engulfed developed countries after the bankruptcy of Lehman Brothers in 2008.

The rules are designed to improve the ability of banks to absorb losses and avoid the need for taxpayer bailouts. They are "essential for restoring confidence in the regulatory framework for banks and to help ensure a safe and stable global banking system," the committee said.

The committee, based in Basel, Switzerland, is made up of representatives of central banks and bank regulatory agencies from the world's largest nations, including the United States, China and Germany. Countries represented on the committee have agreed in principle to apply its findings.

The report comes as tension in the European financial system again raises questions about whether banks remain prone to crises that can ripple through society. …

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