Basel Rules Face Change With No-Risk Sovereign Debt a Focus
By Liam Vaughan & Gavin Finch
Published December 6 2011 Bloomberg
Regulators may diminish the central role of government bonds in planned banking rules designed to make the financial system safer. The Basel Committee on Banking Supervision, which coordinates regulations for 27 countries, may let banks use equities and more corporate debt, in addition to cash and sovereign bonds, to satisfy new short-term liquidity standards, said two people with direct knowledge of the plans who requested anonymity because the talks are private. The move could reduce demand for European government securities, making it harder for nations on the brink of insolvency to fund themselves.
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