"The BVCA has long advocated the relaxation of capital and liquidity rules for banks at a time when small businesses in particular are finding it especially difficult to access debt finance. Sunday's announcement from the Bank for International Settlements (BIS) that the first ever global liquidity standards - to be implemented via Basel III - would not only be less draconian than originally feared, but would also be enforced in 2019 (four years later than originally planned) should be welcomed by all who are striving to help this country return to economic growth.
"One of the central pillars of Basel III involves the new "liquidity coverage ratio" - a plan to increase the liquidity of assets held by banks to shield themselves from market panic. While this is certainly essential, the compromise arrived at in the original agreement on Basel III two years ago erred too much on the side of caution, as only government bonds and top-quality corporate bonds could count towards capital buffers. The new compromise however broadens the list of corporate bonds that can qualify, while also deeming some equities and secure mortgage backed securities acceptable in this regard.
"It was pleasing to see stocks in European banks surge this morning in response to this announcement. Financial stability is necessary but certainly not sufficient if we are return to the path of economic growth, and this new compromise strikes a more balanced tone that should help give banks the confidence to start lending to small businesses once more."
More information can be found here http://www.bis.org/press/p130106.htm