The BBC and economics

The BBC report that (my emphasis):

'Central bank governors and senior regulators have agreed new rules designed to prevent a repeat of the recent financial crisis.

At a meeting in the Swiss city of Basle, they agreed a deal requiring banks to hold more capital in reserve.

BBC business editor Robert Peston says the deal is an important milestone in banking reform.

He says it should mean banks having a greater ability to absorb losses in future crises without taxpayer help.

...

'The amount of common equity - the best capital for absorbing losses - that banks have to hold will rise from 2% of their loans and investments to 7%.

The 7% includes a 2.5% "conservation buffer" to protect banks against periods of difficulty or stress.

If banks' capital ratios fall below 7%, regulators may place restrictions on their ability to pay dividends and bonuses.

The biggest banks - whose failure could bring down the entire financial system - will have to hold even more capital.

Our correspondent says some banks fear the new rules could lead to a new credit crunch.

But regulators say that if they are phased in over several years, it will not undermine economic recovery.

Impressive and reassuring? Well not if you read on to where Robert Peston informs us that:

'The new requirement should prove little problem for UK banks, as it is in fact lower than the 8-9% ratio currently held by them.

It is also well below the 10% level that was being pushed for by the UK, the US and Switzerland.'

and

'The rules may have the effect of limiting lending, at least in the short term, as most banks - particularly those in Europe - have too little capital for the loans they have already made.'

So the new strict rules will have no effect on UK banks who already hold more capital and anyway lending may reduce!

Does Robert Peston even understand what BASEL III is saying and how long it has been being discussed?