George Osborne urged the G20 group of industrialised nations not to backtrack on plans to force banks to hold more capital to buffer them against future economic shocks.
The Chancellor, taking to the world stage for the first time yesterday at a meeting of G20 finance ministers in South Korea, said he would be "pressing for agreements reached last year on capital, leverage and liquidity to be concluded".
"We need to end the uncertainty," he added, amid suggestions that several European countries were seeking to water down the new measures by allowing banks to use so-called "hybrid capital" – a mixture of debt and equity – to count towards the required level of funding.
Mr Osborne comments came as a fresh wave of uncertainty swept the markets amid rumours that the French bank Société Générale was in trouble because of its exposure to derivatives. SocGen declined to comment but sources close to the lender insisted the rumours were false and simply a sign of the markets' current nervousness.
Banks have been lobbying hard to have the capital rules phased in over a longer period, with some success. Regulations governing their trading books, which were due to come into force next January, already look set to be delayed.
There is also disagreement among G20 members over proposals from the International Monetary Fund for new taxes to be levied on banks to build up funds that will pay for future bailouts, thus protecting taxpayers from having to contribute.
Canada and Japan have said they will not impose new levies, while the European Union has proposed using them to set up a bailout fund that would be available across the 27-member bloc. Britain is vehemently opposed to such a plan, arguing that revenues should be used by individual governments as they see fit and that one nation should not be required to solve the problems of others.
Britain is willing to negotiate about when the rules are implemented but insists there should be no backsliding on the type of capital to be held – and how much. Despite this, Mr Osborne said the top priority for the G20 summit in the city of Busan was to support economic growth.
Britain's hardline stance on capital comes despite banks warning that they will not be able to provide cash to lend to businesses or consumers if the new capital rules are too tough or are imposed too quickly.
The British Bankers' Association (BBA) said its members understood the need for reform but remained concerned about the impact of some of the changes, particularly rules on liquidity. It said: "There is a very real risk that banks would not be able to meet the needs of their customers and continue to support the economy if the proposals were implemented as currently struck.
"The industry urges the Basel Committee and G20 to proceed cautiously and get the implementation date and transition provisions right. There is an important role for the G20 and Financial Stability Board to play in monitoring the implementation of rules to ensure that all G20 countries meet the new standards they have committed themselves too.
"We would agree with the Government that it is far more important to find international agreement on issues central to future financial stability, such as capital and liquidity reform, than it is to spend time discussing tangential issues such as taxation."
The Basel committee on banking will meet next month to finalise the changes to the capital and liquidity regimes and agree the timetable with which they will be implemented.
These reforms have been developed following recommendations made by the G20 summit last year. At the moment the Basel committee and the Financial Stability Board are attempting to calibrate the packages and to understand their impact on the global economy.