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(G20) FSB chief stresses need for implementation of tougher bank rules
SEOUL, Nov. 12 (Yonhap) -- The chief of the Financial Stability Board (FSB) on Friday stressed the need for implementation once global leaders agreed on tougher bank capital rules and financial supervisions.

   FSB Chairman Mario Draghi said "greatest progress" on financial reforms was made as leaders of the Group of 20 major economies endorsed a set of tougher bank rules.

   "The G-20 has been capable of showing an unprecedented amount of international cooperation in its decisions. But it's also fair to say that we're probably half-way through," Draghi said in a news conference after the G-20 summit wrapped up.

   He said intended effects for financial reforms can be accomplished only through legislation, which could empower financial supervisors. "The essence of the game is implementation."

   His remarks came as leaders from the G-20 countries endorsed a set of stiffer bank capital rules, called "Basel III," under which banks should hold more common equities to boost their capacity to absorb losses.

   G-20 leaders also stressed the need to put systemically important financial institutions under more rigorous supervision by making them have higher loss-absorption capacities beyond the new bank capital rules.

   Global financial regulators agreed to curb "too-big-to-fail" banks by requiring them to beef up additional capacity to absorb losses at the meeting of the FSB in October. But the definition of SIFIs and the timetable for the rule's application will be determined at subsequent FSB meetings.

   Draghi said that by mid-2011, the FSB and national authorities will identify so-called G-SIFIs, whose influence goes beyond the national boundary so that their potential failures are feared to pose greater risks to the global financial system.

   He cautiously forecast that about 20 financial institutions may fall into categories of G-SIFIs.

   "At present time, systemic risks stem from these institutions and an absence of implemental frameworks," he added.

Financial Stability Board Chairman Mario Draghi holds a press conference in Seoul on Nov. 12 after the G-20 summit.(Yonhap)