The Basel Committee on Banking Supervision has concluded that the level of capital in the banking system needs to be strengthened to raise its resilience to future episodes of economic and financial stress, the committee said Thursday.

Boosting capital will be achieved by a combination of measures, the committee said, “such as introducing standards to promote the build up of capital buffers that can be drawn down in periods of stress, strengthening the quality of bank capital, improving the risk coverage of the capital framework and introducing a non-risk based supplementary measure.”

Also, the regulatory minimum level of capital will be reviewed in 2010, it added, to arrive at a total level and quality of capital that is higher than the current Basel II framework.

However, it will not be raising capital levels in the current climate of financial stress to avoid further intensifying the credit cycle, the committee said.

“Strengthening the global capital framework in this manner will enhance confidence and lay the foundation for a more resilient banking system,” it said.

IE