Market dissects relaxed Basel guidelines

Author: | Published: 29 Jul 2010

The Basel Committee’s proposed relaxation of liquidity and capital guidelines is good news for banks. But regulators must still provide more clarity, and be careful not to water down their original intentions too much.

On Monday, the Committee released its latest set of amendments. Changes from the previous draft include an expansion of the definition of eligible liquid assets, reducing the size of countercyclical buffers, and delaying the implementation of key measures such as the long-term leverage ratio.

Since the last set of proposed guidelines was released in December, banks have been lobbying hard for changes to be made.

“Regulators seem to have realised they’d overshot the mark, and are pulling back,” said Mark Nicolaides, a partner at Latham & Watkins in London.

“With the earlier proposals the Committee wasn’t listening to the banks’ concerns. Now, though many of the proposals are still the same, there have been...