ISTANBUL

A top official at the Federal Reserve has signaled that the US central bank is preparing changes to banks’ capital requirements.

Speaking at a Thursday policy forum hosted by the Cato Institute, US Federal Reserve Vice Chair for Supervision Michelle Bowman said capital requirements remain a cornerstone of the prudential regulatory framework.

She noted that the Fed plans to propose rules in the coming weeks to implement the final phase of the Basel III standards in the US.

“These changes to the capital framework eliminate overlapping requirements, right-size calibrations to match actual risk, and comprehensively address long-standing gaps in our prudential framework,” Bowman said.

She added that regulators have developed proposals to revise four key elements of the regulatory capital framework for large banks: stress testing, the supplementary leverage ratio, risk-based capital requirements under Basel III, and the surcharge applied to Global Systemically Important Banks.

She cautioned that continuously increasing capital levels without a clear objective can impose costs on the real economy, warning that excessive capital requirements could undermine banks’ ability to provide credit.

Bowman also said the Fed is taking steps to modernize capital rules and is working alongside the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation to jointly propose rulemaking changes.