Banking

House of Lords written question – answered at on 14 December 2010.

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Photo of Lord Hollick Lord Hollick Labour

To ask Her Majesty's Government what is HM Treasury's forecast of the impact on growth in gross domestic product of the full implementation of Basel III rules for banks.

Photo of Lord Sassoon Lord Sassoon The Commercial Secretary to the Treasury

We welcome the endorsement by the G20 of the Basel reforms to strengthen international capital and liquidity standards, which address a number of the key weaknesses in financial regulation highlighted by the financial crisis. The Basel package represents a credible and crucial set of reforms that will strengthen the resilience of the banking system to the long-run benefit of the economy.

The UK has consistently argued for a high standard of regulation, while recognising that the short-term impact on economic recovery should be mitigated through appropriate transitional arrangements and careful calibration.

The Basel Committee has agreed an extended transition period, with most elements of the package phased in gradually from 2013 to 20191. This strikes the right balance. Extending the transition further would unnecessarily delay the move to greater financial stability.

Work completed by the UK authorities and Basel Committee indicates that strong net benefits will accrue from the package in the long run2. Overall, we believe that the agreed Basel package will deliver significantly greater future financial stability while supporting strong and sustainable economic growth.

1 For details see: http://www.bis.org/press/p100912b.pdf

2 For details please see http://www.bis.org/publ/bcbs173.pdf?frames=0

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