The Globe and Mail reports in its Thursday, Feb. 13, edition that the federal banking regulator announced on Wednesday a pause in increases to banks' required capital levels due to economic uncertainty and slow global progress on post-2008 financial crisis rules. A Reuters dispatch to The Globe reports that the Office of the Superintendent of Financial Institutions, Peter Routledge, cited U.S. tariff threats as a contributing factor to this decision. Mr. Routledge said he wanted to ensure that the systemically important banks could capital-plan over a longer time frame. OSFI previously delayed key rules on capital floor levels under Basel III by one year to enhance the banks' stability. The suspension is now indefinite, according to Mr. Routledge. OSFI confirmed that the output floor will stay at 67.5 per cent of a bank's risk-weighted assets. Banks will be notified at least two years before any increase is implemented. Mr. Routledge stated that the regulator is prepared to adjust the domestic stability buffer, an extra capital requirement for large banks to maintain resiliency. Global reforms require Canadian banks to assess risks in their loans using a standardized model.
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