FRANKFURT — For banks groaning under the burden of ever more restrictions on the risks they take, the chairman of the committee that establishes global banking standards has some bad news: There is more to come.
The Basel Committee on Banking Supervision has already been behind a global push to raise the amount of capital that banks use to do business, as part of a broader effort designed to avert or at least blunt the impact of future financial crises.
The next step will be to fine-tune the rules, Stefan Ingves, chairman of the committee, said in an interview following a meeting of the group here on Wednesday. It includes regulators and central bankers from most of the world’s largest countries including the United States, Britain, Japan and China.
In practice, the fine-tuning will almost certainly increase the amount of capital that banks need and force them to reduce their dependence on borrowed money.
“We have delivered what we set out to deliver,” Mr. Ingves said of the Basel Committee, whose members include the European Union. “But that doesn’t mean that the world ends and we are finished.”
On Friday, the Basel Committee faulted both the European Union and the United States for the way they have implemented rules intended to improve the way banks protect themselves against risk. It is up to individual nations to apply the Basel Committee recommendations in their own banking systems.
The European Union and the United States complied with most of the minimum standards set by the Basel Committee, but they fell short on several counts, the committee said. For example, European rules are lacking in the way that banks are allowed to estimate the risk of various business activities, the committee said in a statement.
Banking industry representatives frequently complain that pressure from the Basel Committee and national regulators has made it harder for them to lend money to customers, and have pleaded for an end to continuous rule-making. Even some critics of the way banks behaved before the financial crisis have shown some sympathy for the banking industry’s point of view.
“We really do have to think about whether in fact we have reached the point of adequate regulation and when we would step beyond,” Raghuram Rajan, governor of the Reserve Bank of India and former chief economist at the International Monetary Fund, said at an event in Paris last month.
Mr. Ingves said it was unrealistic to expect regulations to stop evolving. “I know that discussion is going on out there,” he said. “You come up with the perfect system and it’s written in stone.”
He added, “In the real world that’s not how it works. There are always new issues.”
For example, the Basel Committee will probably impose more restrictions on the methods banks use to calculate risk. That would have an impact on the amount of capital that lenders need to deploy.
Under proposed rules expected to take effect in 2019, the world’s biggest banks will be required to have capital equal to at least 16 percent of their assets — the so-called capital ratio — after adjusting for risk. It is the way that banks calculate the risk adjustment that the Basel Committee is focusing on.
Banks have considerable leeway to estimate the riskiness of a loan or other transaction, and therefore how much capital they need. New guidelines being developed by the Basel Committee would reduce banks’ discretion, and therefore in many cases effectively increase their need for capital.
How much more capital would depend on what methods the banks use to calculate risk. Conservative banks might not need any more capital, but banks that have used questionable methods to estimate risk might have to either raise more capital or sell risky assets.
Studies have shown that banks are often tempted to underestimate risk, because they make more profit when they use a high proportion of borrowed money.
The Basel Committee, whose recommendations serve as a template for national regulators, is likely to require banks to use more standardized methods for determining risk. “Most likely, banks won’t be free to choose any model they want,” Mr. Ingves said.
Mr. Ingves is also the governor of Sveriges Riksbank, the central bank of Sweden, which suffered fewer banking problems than other European countries but now faces the same problem that the eurozone does: very low inflation, bordering on deflation. Sweden still has its own currency, the krona, but is a member of the European Union and its economy is closely tied to the eurozone.
Mr. Ingves remains sensitive to criticism that the Riksbank erred when it raised its benchmark interest rate to 2 percent at the end of 2011.
Soon after, inflation turned negative and has fluctuated close to zero since then. In October, consumer prices in Sweden fell at an annual rate of 0.1 percent. The central bank has since slashed the benchmark rate in steps to zero, but like the European Central Bank, it is struggling to raise inflation. In Sweden, the task is complicated by overly indebted households.
“We have quite an unusual situation,” Mr. Ingves said. Growth, at 0.3 percent in the third quarter compared to the previous quarter, is “reasonable” compared to other European Union countries. “At the same time, we have very low inflation,” he said. “That’s a combination we have never seen in the past.”
Mr. Ingves said that the Riksbank did not formally coordinate policy with the European Central Bank, and he declined to comment on E.C.B. policy. As a small, export-oriented country, Sweden must simply adjust to what its bigger counterpart does, he said.
“It’s like sailing in a small boat on the ocean,” Mr. Ingves said. “If there is a storm out there you do your best, and hope you know how to sail.”