Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Corporate Crime & Compliance UK newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360, London (March 27, 2020, 5:13 PM GMT) -- A broad package of global financial regulation drafted to help avoid another financial crisis has been delayed until 2023 to free up banks to concentrate on keeping cash flowing into economies to soften the impact of the coronavirus, regulators said Friday.
The Basel Committee on Banking Supervision has put on hold a package of global regulation drafted to help avoid another financial crisis. (AP)
The one-year delay, which was approved by the committee's oversight group of central bank governors and heads of supervision, will allow banks to focus instead on keeping themselves afloat and pumping money into the economy during the COVID-19 crisis. The deferral will also lessen regulator's supervisory burden during the uncertainty, the committee said.
"Today's measures will free up operational capacity for banks and supervisors as they respond to the economic impact of COVID-19," Pablo Hernández de Cos, chairman of the Basel Committee and governor of the Bank of Spain, said.
The Basel Committee brought the measures in response to the financial crisis, which exposed shortcomings in the way it had managed threats to the market.
The voluntary framework is designed to boost the amount of capital that banks are required to hold by making them increase liquidity and reduce leverage. Lawmakers hope to improve the sector's ability to absorb shocks arising from financial and economic stress, improve risk management and governance at banks and increase transparency and disclosures.
The incoming rules include parts that deal with credit risk, operational risk and market risk — which are informally known as Basel IV. This part of the package, which the European Commission has been consulting on, will also be pushed back from 2022 to 2023.
And the so-called output floor, which aims to ensure that there is a standard approach to the way that banks calculate how much capital they must hold, will also be delayed by a year to Jan. 1, 2028.
"It is important that banks and supervisors are able to commit their full resources to respond to the impact of COVID-19," François Villeroy de Galhau, chairman of the GHOS and governor of the Bank of France, said. "This includes providing critical services to the real economy and ensuring that the banking system remains financially and operationally resilient."
--Editing by Alyssa Miller.
For a reprint of this article, please contact reprints@law360.com.
