July 24, 2009

Global banking institutions support "far-reaching" regulatory reforms that include higher capital requirements but warn that rushed judgments could hinder financial market recovery, the Institute of International Finance said in a report on Thursday.The report comes as governments around the world aim to clamp down on banks that found themselves unprepared to handle the global credit crisis and recession in the past year.

Fears that a meltdown at large institutions would upset the entire global financial system led governments to intervene by injecting capital into banks and flooding the markets with cash.The group accepted that public intervention was needed to stabilize markets, but said it was now key that governments develop "clear strategies for withdrawal" from the private sector to avoid competitive distortions.