Regulators urged to review rules, liquidity rules

How rules are applied to banks and the calculation of their liquidity buffers should be reviewed following recent turmoil in the banking sector, said Klaas Knot, chair of the G 20's Financial Stability Board.

The failure of Silicon Valley Bank, a U.S. bank that US regulators did not consider to be systemic and therefore required to comply with more onerous liquidity rules, was felt in Europe.

The government in Switzerland decided to take over ailing Credit Suisse, instead of closing it down using resolution tools regulatory authorities developed after the 2008 global financial crisis.

Knot, who also heads the Dutch central bank, said the FSB has begun evaluating how the U.S. and Swiss authorities responded to these events.

Regulators should reconsider which type of banks are deemed to be systemically important and therefore come under global Basel III capital standards, Knot said.

Knot said at an event held by the European Banking Federation.

Supervision has, in our opinion, been better than it has been on the other side of the Atlantic. It was also time to reconsider the liquidity coverage ratio, a buffer of cash and other liquid instruments banks are required to hold to cope with short-term funding squeezes, Knot said.