The tougher financial regulations being considered by members of the Group of 20 industrial and developing nations will not have a big or lasting impact on global economic growth, the Bank for International Settlements' general manager said Monday.
In a press conference at the conclusion of the BIS' annual meeting, Jaime Caruana said it was important that the stress tests being carried out by European governments on their banks be tough and forward looking, and that the authorities stand ready to deal with any problems the tests reveal.
G-20 leaders met in Toronto over the weekend, and agreed to implement rules that will lead banks to have higher levels of capital and stricter liquidity standards by 2012.
The period over which the new rules are phased in should be consistent with supporting the fragile economic recovery, Caruana said.
But he said the BIS' own analysis indicates the new rules will not weaken economic growth, as claimed by the Institute of International Finance, which represents the interests of financial institutions around the world. "The early estimates that we have indicate this is low and temporary," Caruana said.
The IIF claims the new regulations requiring banks to hold more capital will knock 2% to 3% off G-20 gross domestic product over 10 years.