July 26, 2010 11:31 PM EDT
Top central bankers and regulators around the world said yesterday they had agreed on new standards to ensure the banking system could survive any new financial crisis.
"The agreements reached today are a landmark achievement to strengthen banking sector resilience in a manner that reflects the key lessons of the crisis," European Central Bank president Jean-Claude Trichet said in a statement.
Officials "have ensured that the reforms are rigorous and promote the long term stability of the banking system."
"We will put in place transition arrangements that ensure the banking sector is able to support the economic recovery," Mr Trichet said.
The European Central Bank president was commenting on the Group of Governors and Heads of Supervision, which looks after the work of the Basel Committee on Banking Supervision.
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Basel committee and the Dutch central bank head Nout Wellink said "a strong banking sector is a necessary condition for sustainable economic growth."
He added, the agreement should give additional transparency on the planned reforms, thereby decreasing market uncertainty.
Basel III will update regulatory accords in the fallout from the world financial crunch, which submerged many banks and plunged the global economy into recession.
The Basel committee's recommendations will be submitted to a summit of the Group of 20 top economies later this year for approval.
Mr Trichet's announcement follows Friday's stress tests results, which showed that the European banking system was sound and strong enough to survive another crisis.
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