Central bankers from leading industrial countries agreed Monday on common standards for the minimum capital reserves that banks must hold. The accord ``will help to strengthen the soundness and stability of the international banking system and will remove an important source of competitive inequality for banks arising from differences in national supervisory requirements,'' said Karl Otto Poehl, president of West Germany's central bank. It represents ``a significant step forward in international supervisory cooperation,'' he said after the meeting at the headquarters of the Bank for International Settlements. The new standards detail a framework for measuring capital adequacy and set a minimum reserve standard for each country's authorities to put into force. A BIS committee chaired by Bank of England associate director Peter Cooke completed the draft proposals last December. Swiss and British banks, which already have high capital requirements, are expected to benefit particularly from the new rules. Banks in France and Japan generally will have to boost their reserves because their countries have relatively lenient requirements. Central bankers endorsed a target capital ratio of 8 percent of a bank's assets, to be achieved in each country by the end of 1992. At least half of a bank's capital base counted toward the standard must consist of equity capital and published reserves from after-tax retained earnings. Central bankers from the Group of 10 major industrial countries and Switzerland attended Monday's meeting. The Group of 10 includes Belgium, West Germany, France, Britain, Italy, Japan, Canada, the Netherlands, Sweden and the United States.
