The oversight body of the Basel Committee on Banking supervision, the Group of Governors and Heads of Supervision, has agreed to push back implementation of increased capital requirements and restrictions, known as Basel III.

The committee has decided to provide greater flexibility to build up cash reserves. The new standards are aimed at preventing future banking crisis.

"Less strict liquidity rules should reduce pressure on banks, thus helping provide a further boost to confidence and the real economic growth, all else being equal," explained analysts at Barclays Research.

"Also, this should ease the expected impact of the introduction of the Liquidity Coverage Ratio (LCR) on money market functioning, in terms of lower bank participation in the very short-term interbank market."

MG

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