Central bank governors, top supervisors reach deal over compromise revisions but capital and liquidity package remains largely intact By Melvyn Westlake

Regulatory agencies move swiftly to implement the historic financial reform law. Administration sees reforms as an example for the world By Nick Paraskeva

Too-big-to-fail firms may face exposure curbs and surcharges. G20 gives go-ahead to Financial Stability Board approach

The latest regulatory proposal from the Basel Committee, a countercyclical buffer requirement, was foreshadowed back in December when the main package of capital and liquidity reforms was unveiled. But it has taken several more months to flesh out. The consultative paper on this topic was issued by the Committee in mid-July.*

After prolonged wrangling over far-reaching supervision regime, agreement is tantalisingly close. But there is much at stake By Melvyn Westlake

America’s state-based regulatory system hinders recognition of Solvency II equivalence. Transitional measures urged By David Keefe

Solvency II test calibrations ease up a little but is it enough to satisfy the industry, which may face yet another study?

LONDON – Despite widespread scepticism, European officials insist the much-vaunted stress testing of the EU’s 91 largest banks has been conducted to a very rigorous standard. Presenting the results of the four-month exercise in London in late July, Vítor Constâncio, vice-president of the European Central Bank (ECB), described the assumptions and scenarios underlying the stress test as “severe, rigorous and very comprehensive.” The test results show the “resilience of the EU banking sector” and make a “big contribution to financial stability” in Europe, he claimed.

PARIS – European supervisors are continuing to push warily towards greater standardisation of the vast over-the-counter (OTC) derivatives market, and shifting a much larger slice of trading on to regulated exchanges. However, the complexities and diversity of this market are obliging supervisors to move cautiously, with a fresh consultation launched in mid-July,* on the scope for both more standardisation and exchange trading.

MUNICH – The proposed Basel III capital and liquidity reforms will oblige the European banking industry to raise additional capital equivalent to 40% to 50% of its current Tier 1 capital base, or some €700 billion ($910 billion), according to new estimates. And, this does not include any further capital requirement associated with a target leverage ratio.