Tough global bank reforms will be disproportionately difficult to implement in developing economies and will damage their growth, a global taskforce of bankers and businessmen from emerging markets is set to warn.
The so-called Basel III rules will impose capital and liquidity requirements that were designed for U.S. and Europe institutions but would be difficult to implement in emerging economies, according to a report set to be issued on Sunday by the B20 group of businesses, which advises the G20 group of nations.
Peter Sands, chief executive of Standard Chartered and co-chair of the B20 taskforce that prepared the report, told the Financial Times that the rules on liquidity, counterparty risk and trade finance will also cut the supply and raise the cost of credit in those economies.
“The thrust of the reforms has been about what Europe and the U.S. need to do. Some of these things are going to have unintended consequences and can be quite dangerous” for parts of the world where the financial system is less developed.
For example, the taskforce argues that developing economies will be hit particularly hard by the part of Basel III known as the “liquidity coverage ratio” that requires banks to hold assets that are easy to sell in the event of a market crisis.
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