LONDON, October 28 (Global Risk Regulator) – Banks face a significant increase in capital requirements because a key assumption underlying the complex Basel II capital rules proved incorrect, a top UK financial regulator said today.

LONDON, October 22 (Global Risk Regulator) – European regulators and accounting rule-makers today welcomed an agreement that averts an immediate threat to achieving a single set of global rules because of the controversy over fair value accounting that’s been sparked by the world financial crisis.

LONDON, October 27 (Global Risk Regulator) – A round-up of recent global regulatory news follows: G20 nations prepare reform meetings WASHINGTON - Finance ministers and central bankers from the Group of 20 industrialised and developing countries meet in Brazil, currently G20 president, over November 7-9 to discuss reforming global financial regulation, and prepare the groundwork for the later summit in Washington on November 15. The Washington G20 gathering will try to work out how best to prevent a repeat of the global turmoil that Bank of England deputy governor Charles Bean last week described as “possibly the largest financial crisis of its kind in human history”.

US Banks warned on range of future regulation BALTIMORE, Maryland, October 20 (Global Risk Regulator) – Bank managements must be ready for a range of potential regulatory outcomes in both the short and long term, given the fluid situation in which they currently find themselves, Federal Reserve Board of Governors member Randall Kroszner said today.

BUDAPEST, October 16 (Global Risk Regulator) – America’s biggest banks, the co-called core banks, plan to start their delayed year-long tests of the controversial Basel II bank safety rules by the April 1, 2009 deadline set by regulators, a top federal supervisor told Global Risk Regulator today.This means that after a series of delays the institutions representing the bulk of US banking assets will have begun by April 1, 2010, provided the tests are deemed successful, the three-year transition to the complex, risk-focused Basel II capital adequacy rules. The core banks, estimated at between six and a dozen, are required by US supervisors to implement Basel II. In doing so they must use only the most advanced approaches to measuring their risks and determining the minimum capital they need to absorb shock losses.

Standard setters say there is no change to concept. But calls for the suspension of fair value accounting rules have been mounting

BASEL – International efforts to put in place a more robust liquidity risk management framework for banks took a big stride forward in September. First, EU supervisors issued their advice* to the European Commission on how banks and investment firms in the 27-country bloc should manage their liquidity. Then, the Basel Committee, which effectively sets prudential standards for banks around the world, issued its up-graded principles** for the management and supervision of liquidity risk.

MADRID – Regulators are consulting on new rules for funds of hedge funds, a rapidly expanding asset class for retail investors. These kinds of vehicles provide the main means for retail investors to gain access to the often high-leverage investment styles offered by hedge funds, which are frequently barred from dealing directly with the general public.

WASHINGTON – More coordination is needed on the various emergency plans being implemented by governments to deal with the global financial crisis, the man who’s spearheading the detailed international regulatory response to the turmoil said as world leaders toiled to restore confidence.

One indicator of the general dissatisfaction with mainstream explanations for the current crisis, and a search for alternative policy prescriptions, is the renewed interest over recent months in the ideas of the late Hyman Minsky, a heterodox US economist who died in 1996. He argued that the financial system is fundamentally unstable, with inevitable booms and busts; and he developed a model of the credit system, known as the “Financial Instability Hypothesis” (FIH).