The world's major bank regulators overnight reached agreement on the shape of the Basel III rules. As expected, the meeting considered a proposal for a minimum "core" tier one capital of 7.0 per cent. That figure includes a "conservation buffer" of 2.5 per cent of assets.There will also be a second buffer, intended to moderate periods of rapid credit growth. A basic leverage ratio of three per cent will also apply.The new capital rules will begin to apply from 2013 and will be fully phased in by 2015 under the proposals. Some associated changes to capital rules will not be phased in until between 2016 and 2018.The liquidity coverage ratio, outlined two months ago, will be introduced from January 2015. A revised net stable funding ratio will apply from January 2018The Group of Governors and Heads of Supervision met in Switzerland at the weekend to confirm new rules governing banks' capital and liquidity. The rules are designed to minimise the effect of future shocks to the world financial system.In more detail, the capital standards announced include:• Lifting the minimum capital requirement from two per cent to 4.5 per cent. All this capital must be common equity. This will be phased in by 1 January 2015. • Raising the tier one capital requirement, which includes common equity and other qualifying financial instruments, from four per cent to six per cent. This will also apply from January 2015.• The capital conservation buffer above the regulatory minimum requirement will be set at 2.5 per cent and will also be funded wholly from common equity. There will be limits on dividends payments by banks that need to draw on this buffer.• There will also be a countercyclical buffer within a range from zero to 2.5 per cent and which need not be wholly funded by common equity as long as the alternative is "fully loss absorbing capital". Local regulators will implement the countercyclical buffer "according to national circumstances". The purpose of the countercyclical buffer "is to achieve the broader goal of protecting the banking sector from periods of excess aggregate credit growth." This buffer "will only be in effect when there is excess credit growth that is resulting in a system-wide build up of risk."A leverage ratio of three per cent remains part of the proposal, though this percentage may change following further review by regulators and banks."Systemically important banks" will also need yet more capital, though the details of this are still being worked out.The meeting sets the scene for final ratification of the rules at the November meeting of the G20 in Seoul.