Basel regulators give some countries extra leeway

Global regulators said on Thursday that banks in low-debt countries like Australia and Denmark will get more leeway to comply with tough new liquidity rules.

World leaders agreed in Seoul last month that the Basel III bank capital and liquidity rules would be phased in between 2013 and 2018. They replace Basel II which failed to ensure banks had enough capital to withstand the credit crunch,leaving taxpayers to inject trillions of dollars to shore up the financial system. The rules were authorised by the global Basel Committee on Banking Supervision which published its final text on Thursday.

Denmark,Australia and a few other countries have low government debt or small corporate bond markets,making it hard for banks to comply with the new requirements that the bulk of a liquidity buffer must be in the form of highly rated sovereign debt.

If you fall within that threshold,then there would be alternatives that could be used, Stefan Walter,Basel Committee secretary-general said. Work on the alternatives,such as use of another countrys debt or use of covered bonds,continues. The buffer comprises a short-term liquidity coverage ratio LCR and long-term net stable funding ratio NSFR.