Forbes.com: EU ministers agree on flexible bank capital rules - by Dave Graham and Marcin Grajewski
EU ministers agree on flexible bank capital rules- by Dave Graham and Marcin Grajewski
European Union finance ministers agreed in principle on Tuesday to make capital rules for banks more flexible to reduce their likelihood of worsening boom-and-bust cycles in the economy. Under the agreed plan on long-term rules, which the EU's executive European Commission will use to draft legislation in October, banks would have to build higher capital buffers in good times so they can be reduced during downturns. This would help prevent financial institutions lending too much money when economic growth is high and allow them to provide more loans in bad times. The scheme is intended to ensure the 27-nation EU is better prepared for any repeat of the global financial crisis, which was triggered by bad loans in the United States and spread quickly through the world's economies.
