Internationally, the moves to strengthen banking regulation are being led by the Basel Committee on Banking Supervision (BCBS), made up of banking supervisors from the major economies and convened by the Bank for International Settlements (BIS). The BCBS has developed a number of proposals under the broad “Basel 3” label which are expected to be agreed at the upcoming G-20 meeting in November.
The proposals are focussed on strengthening banks’ minimum capital and liquidity requirements. These include higher Tier 1 capital requirements, a greater emphasis on common equity in Tier 1 capital, and a leverage ratio to act as a backstop to the risk weighted capital regime.