ID :
32178
Tue, 11/25/2008 - 15:04
Auther :
Shortlink :
https://www.oananews.org//node/32178
The shortlink copeid
Lee vows to overhaul BIS capital adequacy ratio
LOS ANGELES, Nov. 23 (Yonhap) -- South Korean President Lee Myung-bak on Sunday
criticized the Bank for International Settlements (BIS), saying the excessively
rigorous financial health standards it imposes on banks are aggravating the
credit crunch in South Korea and other emerging economies.
Korean banks are increasingly reluctant to lend money to financially strapped
small- and medium-sized companies due to their declining BIS ratios, despite
repeated requests from the government.
President Lee, who campaigned for overhaul of incumbent international financial
institutions at the G-20 summit in the U.S. last week, directly leveled criticism
at the structural problems of the BIS ratio.
"The BIS capital adequacy ratio and other systems that discourage lending by
banks should be reformed through activities by the Financial Stability Forum
(FSF) and other means," Lee told reporters aboard a chartered Korean Air plane en
route to Los Angeles from Peru, where he attended a summit of Pacific Rim
countries.
The Switzerland-based BIS, an international organization of central banks in 55
nations, determines the financial soundness of lenders worldwide through the BIS
capital adequacy ratio, which measures the percentage of a bank's capital to its
risk-weighted credit.
A BIS ratio of 8 percent or higher is generally regarded as financially healthy.
These days, however, the BIS and many international credit rating agencies are
demanding that lenders have a BIS ratio of over 12 percent.
"Rigorous capital adequacy ratios and accounting standards imposed by the BIS are
hindering banks' lending to their corporate customers. Under the current system,
financial institutions can hardly avoid difficulties. We'll soon raise questions
over all problems stemming from the BIS ratio requirements," said the president.
At the G-20 summit, South Korea, Britain and Brazil were selected as a troika of
moderator countries to play a leading role in creating a new global financial
order and preparing policy agendas for the next G-20 summit slated for April in
London.
South Korea is spearheading an international effort to increase the influence and
voices of emerging economies in the world's new financial order.
South Korea is also seeking to join the FSF, which was created in February 1999
to promote stability in major international financial centers through enhanced
information exchange and international cooperation in financial supervision.
Regarding the president's remarks, his spokesman Lee Dong-kwan explained, "A BIS
ratio of over 8 percent is supposed to satisfy the requirement for financial
soundness. But (credit rating agencies) are actually demanding a BIS ratio of
10-15 percent, putting heavy pressure on banks. President Lee intends to overhaul
such systemic problems."
ycm@yna.co.kr
(END)
criticized the Bank for International Settlements (BIS), saying the excessively
rigorous financial health standards it imposes on banks are aggravating the
credit crunch in South Korea and other emerging economies.
Korean banks are increasingly reluctant to lend money to financially strapped
small- and medium-sized companies due to their declining BIS ratios, despite
repeated requests from the government.
President Lee, who campaigned for overhaul of incumbent international financial
institutions at the G-20 summit in the U.S. last week, directly leveled criticism
at the structural problems of the BIS ratio.
"The BIS capital adequacy ratio and other systems that discourage lending by
banks should be reformed through activities by the Financial Stability Forum
(FSF) and other means," Lee told reporters aboard a chartered Korean Air plane en
route to Los Angeles from Peru, where he attended a summit of Pacific Rim
countries.
The Switzerland-based BIS, an international organization of central banks in 55
nations, determines the financial soundness of lenders worldwide through the BIS
capital adequacy ratio, which measures the percentage of a bank's capital to its
risk-weighted credit.
A BIS ratio of 8 percent or higher is generally regarded as financially healthy.
These days, however, the BIS and many international credit rating agencies are
demanding that lenders have a BIS ratio of over 12 percent.
"Rigorous capital adequacy ratios and accounting standards imposed by the BIS are
hindering banks' lending to their corporate customers. Under the current system,
financial institutions can hardly avoid difficulties. We'll soon raise questions
over all problems stemming from the BIS ratio requirements," said the president.
At the G-20 summit, South Korea, Britain and Brazil were selected as a troika of
moderator countries to play a leading role in creating a new global financial
order and preparing policy agendas for the next G-20 summit slated for April in
London.
South Korea is spearheading an international effort to increase the influence and
voices of emerging economies in the world's new financial order.
South Korea is also seeking to join the FSF, which was created in February 1999
to promote stability in major international financial centers through enhanced
information exchange and international cooperation in financial supervision.
Regarding the president's remarks, his spokesman Lee Dong-kwan explained, "A BIS
ratio of over 8 percent is supposed to satisfy the requirement for financial
soundness. But (credit rating agencies) are actually demanding a BIS ratio of
10-15 percent, putting heavy pressure on banks. President Lee intends to overhaul
such systemic problems."
ycm@yna.co.kr
(END)
