Monday, March 31, 2014 2:29 p.m. EDT
LONDON (Reuters) – Global regulators aim to crack two of biggest barriers to ending “too big to fail” banks by the end of this year, Financial Stability Board Chairman Mark Carney said on Monday.
Regulators are putting in place a complex jigsaw of rules and mechanisms to wind down failed banks without the massive market fallout seen when Lehman Brothers went under in 2008.
The FSB is the regulatory arm of the Group of 20 leading economies (G20) and Carney said progress is expected by December on requiring the world’s top banks to hold capital in case the bank fails.
The aim is to shield taxpayers who had to shore up lenders in the 2007-09 financial crisis.
The derivatives industry will also be asked to agree a way for derivatives contracts to be amended so their closure can be suspended for a day or two to give regulators time to wind down a bank that has failed.
“We are looking to put ourselves in a position by Christmas to have cracked the two biggest issues,” Carney told a reporters after an FSB meeting in London.
(Reporting by Huw Jones and Andy Bruce)