Economy can weather tougher bank standards: Weber
Stricter banking standards for capital and cash reserves will not burden economic growth, German central bank president Axel Weber said here on Wednesday.
Weber, an influential member of the European Central Bank governing council, told a banking forum that a lengthy transition phase would help banks adapt to new rules without curbing lending to the wider economy.
Reinforcing capital standards "should not make the real economy suffer, as long as there are generous transition periods," Weber said.
On August 18, an assessment by international banking regulators estimated that new regulations could have a modest impact on economic growth.
But Weber said Wednesday that "the real challenge lies in bringing harmonised international rules into line with differing national circumstances."
The Swiss-based Bank for International Settlements (BIS), the so-called central bank of central banks, is drafting tougher bank capital and liquidity rules to try and prevent another international financial crisis.
German regulators have voiced concern however that a preliminary agreement reached in July could undermine the banking sector.
A BIS committee is set to release more details on the proposed requirements next week, and Weber said the task of drawing up new rules as requested by the Group of 20 developed and developing nations by November was "on track."
© 2010 AFP