Response to the global banking crisis

The Group of Central Bank Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, met on 6 September 2009 to review a comprehensive set of measures to strengthen the regulation, supervision and risk management of the banking sector. (see announcement here)

Their decisions will affect Australia's regulatory system in the future (including financial institution capital requirements).

The key measures to strengthen the regulation of the banking sector that were announced included:

  • Raise the quality, consistency and transparency of the Tier 1 capital base.
  • Introduce a minimum global standard for funding liquidity that includes a stressed liquidity coverage ratio requirement, underpinned by a longer-term structural liquidity ratio.
  • Introduce a framework for countercyclical capital buffers above the minimum requirement.
  • Issue recommendations to reduce the systemic risk associated with the resolution of cross-border banks.
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