HIGHLIGHTS-Bank of England's Carney speaks on UK bank capital rules

LONDON, Dec 1 (Reuters) - Bank of England Governor MarkCarney and other officials from the central bank were speakingon Tuesday after the BoE said it would require banks to hold asmuch as 10 billion pounds extra capital, but stopped short ofimmediate action.

CARNEY ON IMPROVEMENT IN BANK RESILIENCE

"UK banks are significantly more resilient now than theywere before the financial crisis. Capital requirements for thelargest banks have increased ten-fold, their holdings of liquidassets have increased four times, their trading assets are downby a third, inter-bank exposures are down by two thirds. And theresult of the Bank's 2015 stress tests underscores theseimprovements."

ON THE COST OF UNCERTAINTY ABOUT CAPITAL RULES

"While the benefits of increased resilience are clear,higher capital costs are ultimately passed on to borrowers anduncertainty about the final resting place for capital canprevent banks from taking the types of prudent risks that theeconomy needs to create jobs and to grow incomes."

"There is no new wave of capital regulation coming, there isno Basel IV. Our objective has never been to raise capitalwithout limit or to raise it by stealth."

ON CHALLENGES FOR BANKS

"The global environment is unforgiving, and the legacy ofthe crisis means private and public balance sheets remainstretched. This calls for resilience not fatalism. Today we havereaffirmed the strength of our banks in the face of these risks.We are providing additional certainty about the shape of thecapital framework and the amount of capital required. We aresetting out how macro-prudential capital buffers will be used tomatch resilience with risks."

ON ECONOMIC IMPACT OF CAPITAL RULES

"The principal purpose of this buffer is to increaseresilience of the banks and to be even clearer the primarypurpose is not restraining credit growth. Now, we recognize thatin the process of increasing capital requirements, there will becosts passed on to borrowers. That will have an impact onoutput, on demand, on output and ultimately some impact oninflation. The question is the order of magnitude of thosechanges. To give you a rough sense of that, all things beingequal, a one percentage-point increase in the counter-cyclicalcapital buffer has on the order of magnitude about a 10 basispoint, 0.1 percent impact on GDP growth, the level of GDP afterthree years. That's quite a marginal impact. There is someuncertainty around those levels."

ON MOVES IN THE CCB

"Just to be clear, the counter-cyclical buffer can only bein increments of 25 basis points, or maybe 25 basis points ormaybe 50 basis points."

ON WHETHER THE GOVERNMENT'S CALL FOR BANK TO CONSIDER COSTSOF REGULATION WILL LEAD TO A WATERING DOWN OF RULES

"Absolutely not. There is no change in the statute. There isno change in our responsibilities to promote financialstability, we will continue to take our decisions, theresponsibility for financial stability rests clearly with theFPC and I can assure you that all of its members fully recognisethe weight of that responsibility and we will do whatever isnecessary to promote financial stability in a way that ispromoting strong, sustainable and balanced growth. We won'tincrease capital without limit, but we will make sure that thissystem is adequately capitalised for plausible but severe stressscenarios. You can make your judgments based on what we havebeen doing there." (Reporting by UK bureau)