However, the recommendation that a capital component of a countercyclical nature be introduced raises a number of questions. What does seem interesting, although it is not explicitly included in the recent Basel proposal, is the idea of having some component of contingent capital. This could be established by issuing bonds that would, under certain circumstances or conditions, become capital as, for example, if an institution’s capital falls below 8% of its risk-weighted assets. Another point on which there is a considerable agreement is the need to review norms and practices on liquidity management and bank funding. These had become quite lax in many jurisdictions. Liquidity and refinancing risks were underestimated, particularly in the environment that preceded the crisis. The recommendations that have subsequently been put forward include a redefinition of liquid assets, the establishment of a minimum global liquidity standard, norms using time bands for the match of assets and liabilities, and higher requirements for liabilities that show greater volatility. In all these cases, there is much that central banks can contribute. The Basel Committee has recently undertaken to advance in defining a global liquidity standard and has fixed a calendar for this process. A robust system of provisions, based on a forward-looking rather than a backward-looking approach, can make a significant difference to the stability of the banking system. This is illustrated by the experience of emerging economies where this policy instrument is used most often and with the greatest intensity.
Even under a model that assigns all the relevant functions to the central bank, coordination and communication between it and the government will still be essential because it is the fiscal authority that is responsible for the use of public resources. In a globalized world, it is, moreover, necessary to develop mechanisms for coordination and communication with the authorities of other relevant jurisdictions. In many emerging economies, this is a key issue because of the significant presence of international banks in these markets. In addition,  BIS Review 142/2010  5  stronger coordination and communication between authorities is vital for progress towards comprehensive or consolidated supervision of financial groups and for avoiding some of the problems detected in the recent crisis. One recommendation on which there is fairly broad agreement is to periodically review the perimeter of regulation and supervision. The traditional view that this should include only institutions taking deposits from the public has been superseded by events. The consensus view that has emerged from the recent crisis is that all institutions of systemic importance must be regulated and supervised. This also includes the obligation to provide information and disclose positions in order to ensure that markets function properly. The practical implications of this recommendation may vary from country to country, depending on the characteristics of their financial systems. There is also broad consensus that minimum capital requirements, applied on permanent bases, must be raised and strengthened as stated in the recent agreement reached by the Basel Committee.