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ANZ: New Global Bank Rules Could Have Choking Effects On Economy

By STAFF Writer
October 28, 2011

NEW ZEALAND NEWS - ANZ slams the new Basel III rules for banks worldwide to increase capital adequacy and liquidity within the banks to withstand global financial shocks. Its chief executive Michael Smith told recently to the Commonwealth Business Forum in Perth that the new rules could have a 'chocking effect' on the economic recovery across the world.

Mr. Smith noted the rules were moving way far ahead of big uncertainty. He told to the delegates, "Far from increasing access to finance and improving economic resilience, I am concerned that in the current environment, there is a real possibility overly conservative rules with an aggressive implementation timetable are likely to have a choking effect on global recovery."

He also pointed to last week's International Monetary Fund (IMF) warning, which said the forces were again at work now that caused 1930s Great Depression, as businesses, governments and households simultaneously have started cutting back spending and de-leveraging balance sheets.

Mr. Smith added, leading economies' banks need to raise capital of $US1.3 trillion for complete transition to the new regulatory requirements.

He said, as per the IMF the economic cost of new regulations could raise lending of global banks by 3.5 per cent points in next five years. The regulations also include Basel III.

He also said that Basel III had been moderated earlier, but there was nothing. It is broken in Australia which needs fixing.

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