Article

Bowing to pressure from the world's banks, in January the Basel Committee on Banking Supervision lightened the requirements for banks to hold sufficient capital to survive a 30-day crisis and delayed full implementation of the new rules until 1 January 2019. The original deadline was 1 January 2015. In addition to the extension, the Committee broadened the definition of liquid assets to include securities backed by mortgages to meet a portion of the requirements. Banks had argued that the original rules were too narrow and would have damaged the economic recovery.

The European situation has been aggravated by the difficulty of obtaining EU-wide approval for regulatory changes. Though the postponement should be good news for small banks, because it would give them the chance to adapt to a complex new system, the delay will compound uncertainty following the decision to abandon the 1 January 2013 target.

ICC has been concerned about Basel proposals to increase capital requirements for trade transactions. The proposals group trade products with a number of other instruments which exhibit significantly different characteristics, effectively categorizing some trade products (such as letters of credit) as "risky" asset classes. ICC notes that as a result of the short-term self-liquidating nature of most trade finance transactions, the losses that banks have historically sustained for these products have been very low compared with other types of commercial and industrial loans.