BASEL – A strong defence of the controversial new liquidity ratios for banks, a key part of the proposed Basel III regime, has been made by a top regulator involved in its construction. The success of the planned liquidity framework “should not be measured in terms of whether it will have zero cost. Instead, the better measure of success is whether the framework corrects pre-crisis extremes at acceptable costs,” Stefan Walter, Basel Committee secretary general told a regulatory conference in early April. “Banks that take on excessive liquidity risk should be penalised under the new framework, while sound business models should continue to thrive,” he said.

NEW YORK – Major dealers and buy-side firms involved in the global over-the-counter (OTC) derivative markets have written a letter to supervisors setting out a range of new commitments intended to reduce risk and improve the way these markets function. The letter was sent in early April to the OTC Derivatives Supervisors Group (ODSG), which is chaired by the New York Federal Reserve, and includes supervisory agencies from German, France, Britain, Japan and Switzerland, as well as the US.

LONDON – European supervisors have decided to use a 5% core Tier 1 capital ratio as the benchmark for the stress testing of EU banks that is now underway to assess how many of them are strong enough to withstand further adverse shocks. The 5% benchmark ratio, announced in early April by Andrea Enria, chairman of the European Banking Authority (EBA), the new London-based supervisory agency, is viewed by some critics as insufficiently tough.

SYDNEY, Australia – Greater use of subsidiary structures by banks operating across borders could have advantages for financial stability, a top Australian central banker argued in March.

WASHINGTON - There are no major differences so far in the way new capital rules for banks are being applied across various countries, according to the head of the organisation tasked with co-ordinating the implementation of the reforms to the global financial system agreed by the Group of Twenty (G20) largest economies.

CHARLOTTE, North Carolina – The list of non-bank financial firms designated as a potential threat to financial stability and consequently subjected to prudential standards and consolidated supervision should not be a lengthy one, a top US regulator said at the end of March.

HONG KONG – Regulators believe universal banking remains an “optimal model” for the South-East Asian financial centre after the global credit crisis, the centre’s top financial regulator said in April.

TOKYO – Greater cooperation and trust in exchanging information and agreement on harmonised standards is what’s needed for reform of the global financial system, rather than some global authority dictating what national authorities can do, a top US central banker said in April.

LONDON – US and international accounting standard-setters have extended “by a few months” their convergence work on key issues that they had hoped to complete by June, raising questions once again about the feasibility of the Group of Twenty’s (G20’s) goal of achieving global accounting convergence by the end of this year.

BASEL – Group of Twenty (G20) supervisors exploring the possibility of regulating so-called shadow banking said in April that a definition should cover all non-bank credit activities from which risks might arise.