Taxpayer bailouts: a thing of the past?

The world's biggest banks may be required to vastly increase their capital, raising their cushion for losses, a panel of central bankers, regulators and officials said Monday.

The new proposal would call on 30 of the so-called "systemically important" banks to hold a minimum buffer of bonds or equity equivalent to 16 to 20 percent of their risk-weighted assets, such as loans. Bonds would be converted to equity to help bolster a flagging bank.

These new rules put forth by the Basel, Switzerland-based Financial Stability Board (FSB) would not take effect until 2019 at the earliest. G-20 leaders are expected to support the proposal later this week at a summit in Australia.

Breaches should be punished by curbing dividends and bonuses, the FSB said.

FSB chairman Mark Carney said the plans marked a watershed in ending banks deemed too big to fail.

"Once implemented, these agreements will play important roles in enabling globally systemic banks to be resolved (wound down) without recourse to public subsidy and without disruption to the wider financial system," Carney said in a statement.

After the 2008 financial crisis, governments spent billions of taxpayer money to bail out banks that could have threatened the global financial system if allowed to go under.

Financial regulators hope the new rules will help prevent another financial crisis and create a common international standard for global systemic banks.

Next steps include more study and public consultations before submitting the final proposal to G-20 leaders next year, the FSB said.

el/uhe (AP, Reuters)