The developing world will be disproportionately hurt by tough global bank reforms because the solutions that US and European banks can use to meet new capital and liquidity requirements are not workable elsewhere, Peter Sands, chief executive of Standard Chartered, told the Financial Times.
A B20 taskforce co-chaired by Mr Sands, and Guillermo Ortiz, chairman of Mexico’s Grupo Financiero Banorte, will issue a report on Sunday charging that the Basel III rules, which aim to prevent a repeat of the 2008 financial crisis, are too focused on western institutions, and rules on liquidity, counterparty risk and trade finance will cut the supply and raise the cost of credit in emerging economies.
“The thrust of the reforms has been about what Europe and the US need to do. Some of these things are going to have unintended consequences and can be quite dangerous” for parts of the world where the financial system is less developed, Mr Sands said.