Banking supervisors published draft rules on Friday that will force banks around the world to build up extra capital in good times, but gave no hint of what level of funds banks would be required to hold.
The global committee said it was on track to deliver a complete package of capital and liquidity reforms, including design and calibration, in time for the November 2010 Group of 20 leaders' summit in Seoul.
"The countercyclical buffer would be imposed when, in the view of national authorities, excess aggregate credit growth is judged to be associated with a buildup of system-wide risk," the Swiss-based Basel Committee said in a statement.
"This will help ensure the banking system has an adequate buffer of capital to protect it against future potential losses," it added.
The Basel Committee, made up of central bankers and supervisors from the G-20 and other countries, ended a two-day meeting on Thursday where they began to finalize a package of tough reforms aimed at ensuring banks have enough capital and liquidity to withstand major shocks without taxpayer aid again.
Markets had been hoping the committee would give some hints on what the new, higher levels of capital will be in the final package to clear uncertainty hanging over bank stocks.
A fleshed out package will be presented to the committee's oversight body later this month for endorsement.
Banks have already won major concessions over when the new Basel III reform will be introduced after G-20 leaders agreed last month it will be phased in over several years rather than implemented by the original end of 2012 deadline.
But the committee's statement on Friday underscored a determination that in return for a longer phase in, regulators will resist calls from banks and some countries to heavily dilute some of the reform's main elements.
"The committee will present to the central bank governors and heads of supervision concrete recommendations for the definition of capital, the treatment of counterparty credit risk, the leverage ratio, the conservation buffer and the liquidity ratios," the committee said.
The committee said it also reviewed proposals for the role of contingent capital in a bank's core capital holdings and will issue a proposal for consultation shortly — a sign that the use of such capital has not been ruled out.
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