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New global rule: Banks must keep more cash to weather crises

International banking regulators agreed Sunday on global rules that would require banks to keep enough cash and liquid assets on hand to survive an acute 30-day crisis.

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The Governor of the Bank of England Mervyn King speaks to the Economic Club of New York Dec. 10. King, the head of the Basel Committee on Banking Supervision, said it was time to set new international banking standards Sunday. The committee agreed to new rules requiring banks to have more cash on hand.

Brendan McDermid/Reuters

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International banking regulators agreed Sunday on global rules meant to ensure banks keep enough cash in hand to survive future market crises, and gave banks until 2019 to comply fully.

The rules will require banks in the future to hold enough cash, and assets such as equities, corporate and government bonds that can easily be sold, to tide them over during an acute 30-day crisis.

The body that oversees the Basel Committee on Banking Supervision, which sets international rules, said Sunday that they will have to hold 60 percent of that amount when the rules start being phased in on Jan. 1, 2015; that will increase by 10 percentage points every year until the standards take full effect at the beginning of 2019.

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