The Basel Committee has announced the level of capital in the banking system needs to be strengthened by a combination of measures including:
- introducing standards to promote the build-up of capital buffers that can be drawn down in periods of stress;
- strengthening the quality of bank capital;
- improving the risk coverage of the capital framework; and
- introducing a non-risk-based supplementary measure.
It will also review the regulatory minimum level of capital in 2010. Current reactions in the market place regarding capital levels have been highly procyclical. The Basel Committee confirmed it will not increase global minimum capital requirements during the economic crisis.