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Fed Liquidity Proposal Seen Trading Safety for Costlier Credit

A proposal to make U.S. banks maintain 30-day war chests in case of a credit crisis is certain to add to borrowing costs, said a former leader of the global group that conceived of the standard.

Stefan Walter, who was secretary general of the Basel Committee on Banking Supervision when it approved an initial version of yesterday’s Federal Reserve proposal, said U.S. regulators have continued their tough interpretations of Basel III rules.