Published by Global Banking and Finance Review
Posted on January 29, 2025
By David Milliken and Suban Abdulla
LONDON (Reuters) -Bank of England Governor Andrew Bailey said he was optimistic that tougher global bank capital rules would ultimately come into force despite uncertainty over whether Donald Trump's administration will implement the so-called Basel 3.1 regime.
Bailey told the British parliament's cross-party Treasury Committee that although the Basel rules were controversial in the United States, banks appreciated they offered the potential of a level playing field for international competition.
"I remain optimistic that ... we'll get agreement on it and that we'll get through this. To be fair to the new U.S. administration, we have to give them time to get into place," he said.
The Basel 3.1 reforms are intended to be the final version of international rule changes agreed by central bankers and regulators from 28 jurisdictions to make the banking system safer in the wake of the 2008 global financial crisis.
But the reforms have faced fierce opposition from U.S. banks, as they often require lenders to hold more capital - reducing the risk that taxpayers will have to foot the bill for future losses but lowering profits for shareholders.
Analysts have said the rules could be watered down or even scrapped under Trump's new administration.
The BoE said earlier this month it would delay implementing the standards in Britain by a year until January 2027 to get clarity on Trump's plans, prompting the European Union to also weigh its options.
"We do need an agreement on Basel going forward. We have delayed that because of the uncertainty from the U.S. angle because there's a competition issue," Bailey said.
(Reporting by David Milliken and Suban AbdullaWriting by William Schomberg and Kirstin Ridley;Editing by Elaine Hardcastle)
