Nout Wellink, Chairman of the Basel Committee on Banking Supervision and President of the Bank of the Netherlands believes that had the banks been able to save for a rainy day and had leveled the capital as per they said, the outcome would have been quite different from what it is today.

“Before we even raise the level of capital, we have introduced a much stricter definition of capital. This is equivalent to a substantial increase in the minimum requirement by itself”, he further added.

He said that Basel III rules had in reality narrowed the characterization of low-risk capital for banks which meant that if any of the banks would see an increase of 7% of assets from 2% by 2019, it would be considered larger than numbers meant for many banks.

The meeting held this week by the Basel Committee on Banking Supervision had the members talking and discussing the ways to make banks less susceptible to an abrupt loss of some source of funding. However, he did mention that rules would be beneficial only when individual countries would work together for their execution.

Stressing on the need of effective implementation and enforcement, he added that although they had new plans at hand for the standardization of banks and the banking systems, their result was unknown until they would apply them to the main course.