BASEL, Switzerland — The Financial Stability Board—central bankers, finance officials and top regulators from around the world—has announced a proposal that would double the amount of money that large banks would be required to have on hand to absorb losses.
The purpose of the new rules, according to the organizations, is to curtail risk-taking and protect taxpayers from having to bail out large banks in times of crisis, as occurred during the financial crisis in 2008. The proposal calls for the new standards to not go into effect until 2019 at the earliest.
The goal of the proposal is to shift the burden of bank failures to fall more squarely on bank investors and the banks themselves. The rules would apply only to so-called global systemically important banks. The new rules would have less impact in the United States, where regulators have already approved similar standards for the eight largest banks that take effect in 2018.
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