The banking industry lobby is again warning that policymakers must be careful that regulatory reform for the financial industry does not derail economic growth.

The Institute of International Finance Inc. said Tuesday that it is working on a set of economic impact studies that will be published at its spring meeting in Vienna on June 10.

“The studies taking account of the Basel proposals as published for comment in December, look at the impact of increased costs of capital and funding on credit and economic growth in different areas of the world,” said IIF managing director, Charles Dallara.

“Our initial findings are sobering and suggest that without adjustment the proposals could have serious consequences for global economic recovery,” he said. “In addition to getting the design and calibration of the new measures right, it is essential that policy makers weigh carefully the timing of their implementation, given their potentially major economic impact. Furthermore, the economic effects will be all the greater if, in addition to the core Basel proposals, we see a host of special taxes and other requirements imposed on major global financial institutions by diverse national and regional public authorities.”

The IIF’s submission to the Basel Committee raises a variety of issues with the proposed reforms. Among other things, it warns that rigid definitions of capital, and the proposed leverage limits, will have a significant impact on firms’ lending.

IE