Don't rush on 'systemically important’ banks

At the Paris meeting of the finance ministers from the Group of 20 leading economies, leaders decided that the world's biggest banks must have higher capital safeguards after an earlier meeting in South Korea last year ended yielding no results.

Ministers at the G20 have reiterated that banks whose failure may adversely affect the financial system have to hold higher loss-absorption capacity through means such as contingent capital or capital surcharge, but not every member of the G20 agrees.

"We believe that there should be no rush to judgment regarding capital surcharges on such firms," Ackermann said at a meeting of the Institute of International Finance, a banking trade group that he chairs.

If approved, banks will have to comply with requirements over and above imminent global norms for banks called Basel III.

Ackermann also said liquidity norms proposed in Basel III could undermine banks' ability to provide basic services.

"As currently formulated, the Basel liquidity proposals could undermine banks' ability to provide a range of basic services such as back-up credit line that are critical to corporations as well as funding for businesses in international trade and a range of retail borrowers," Ackermann said.

In order to head off a repeat of the financial crisis that battered the global economy, banks will be subjected to tougher capital and liquidity standards under the Basel III rules set to be implemented from 2013.

The Group of 20 leading economies, meanwhile, aims to reach an agreement on extra safeguards for systemically important financial institutions when they meet later this year.

At the G20 meeting of finance ministers and central bankers last month, finance ministers had decided that financial regulation will be strengthened and the financial supervision net will be widened across the sector.