Bonds buffer will protect biggest banks from bankruptcy

Noam Stiekema

The largest banks in the world should have a bonds buffer in the event of failure so to be avoided bailouts by governments offer international regulatory authority. The idea is the last major part of the banking reform proposed by world leaders after the financial crisis in the period 2007-2009, during which millions of taxpayers […]

Bonds

BondsThe largest banks in the world should have a bonds buffer in the event of failure so to be avoided bailouts by governments offer international regulatory authority. The idea is the last major part of the banking reform proposed by world leaders after the financial crisis in the period 2007-2009, during which millions of taxpayers have to support under-capitalized lenders. The Financial Stability Board (FSB), comprised of regulators from the Group of 20 top economies in the world (G20), said that international banks such as Goldman Sachs and HSBC should have to January 2019 with buffer bonds or equity, equivalent to 16-20% of the weighted relative risk assets.

The bonds buffer will be converted into capital, to ensure the stability of the problem bank. The total buffer will include minimum core capital requirements that banks must meet. The proposal is expected to be endorsed by the G20 leaders later this week in Australia. The issue will be open for public consultation until 2nd February 2015. The president of the Financial Stability Board and governor of the Bank of England Mark Carney said that the idea of the buffer will be made complete in the next year. This will be marked a turning point for the termination of the practice in some parts of the world banks that are too big to be left to fail. The new rule will apply to 30 banks Financial Stability Board identified as important to the global financial system.

“Once implemented, these agreements will play an important role in the world and will allow banks systemically important to be bailed out without resorting to a government subsidy and without problems to the wider financial system”, Carney said in a statement.

Most of the banks will have to expand its debts in order to comply with the requirements, said FSB. Some current liabilities you may need restructuring. According to plans, parts of the bonds buffer will be owned by foreign subsidiaries, which will serve as a stand for regulators outside the home country of the parent bank.

Read this next

Digital Assets

Midas launches investment strategies for the ‘crypto winter’

Midas.Investments has released three new investment strategies on its custodial CeDeFi platform, creating new opportunities during the ‘crypto winter’.   The platform merges diverse approaches to digital asset management into single-click products to let investors gain steady profits in any market conditions — including the ongoing bear market. a custodial CeDeFi platform, CeDeFi: Unlocking the […]

Digital Assets

Bitcoin.com Wallet adds several ERC-20 tokens

The product expansion includes representatives of the DeFi world, the Metaverse, and the largest stablecoins.

Market News

Savvy Investors to Profit Whether the Stock Market Rebounds or Not

Equities have gone up enormously since the low. SP500 has gained 13.88% since June 17. In August, the indices drifted sideways. On Wall Street, veteran investors expect a move in either direction.

Industry News

Wall Street-backed MEMX obtains SEC approval for options trading platform

The company has raised more than $135 million in funding from 18 stock trading and investing heavyweights, including BlackRock, Citadel Securities, and Morgan Stanley.

Industry News

Amundi US launches ESG strategy that seeks to outperform S&P 500

Amundi’s Responsible investing team includes more than 45 specialists, and its ESG analysis covers more than 13,500 issuers across debt and equity.

Industry News

Verto launches embedded FX payments solution

The Verto API automates currency conversions, tracks payments and exchange rates in real-time, and is being launched in the follow-up of a $10 million in Series A funding last year.

Industry News

SEC awards over $16m to whistleblowers after another successful enforcement action

The program is 10 years-old and has arguably played a critical role in the Division of Enforcement’s ability to effectively detect wrongdoing, protect investors and the marketplace, and bring violators to justice.

Digital Assets

Ripple submits most succint explanation of Hinman issue in XRP lawsuit

It might be useful to get up to date as this could be the end of the road for the SEC.

Retail FX

TradingView integrates first Brazilian broker, Órama Investimentos

Órama offers all kinds of investment products, from fixed income to crypto-related funds.

<