Canada’s banking regulator can’t finish implementing international capital reforms until other countries commit to doing the same, superintendent Peter Routledge said Wednesday.

At the Global Risk Institute summit in Toronto, Routledge said the Office of the Superintendent of Financial Institutions (OSFI) intends to give an update early next summer on its plans to implement the final stages of the Basel III endgame agreement. The international set of rules are designed to prevent taxpayer-funded bank bailouts like the ones that took place in the U.S. during the financial crisis. 

In July, OSFI gave financial institutions a one-year extension to implement a Basel III-related requirement that they change how they calculate risks in their loan books, known as the capital-floor level, amid delays and controversy in the U.S. and EU.

“We cannot extend the implementation lead we share with a small number of signatories,” Routledge said during his remarks. Speaking with reporters, Routledge reiterated his support for the reforms, but said “it’s not a zero probability” that OSFI may have to abandon them.

The proposed changes have been hotly contested by industry groups in the U.S., who have argued higher capital cushions would make banks less competitive and mortgages less affordable. Routledge has come under pressure in Canada for forging ahead with the reforms while the U.S. and other countries were pumping the brakes.

Routledge acknowledged those critics had a point. “We like Basel III,” he said, “but we also like internationally competitive Canadian banks,” adding, “We’re just going to go slow so that we don’t exacerbate competitive imbalance.”

In his prepared remarks, however, Routledge pushed back against criticisms that Basel III is over-cautious and bad for growth. He said there is a “general consensus” among researchers that the benefits of reduced financial shocks they would bring outweigh the costs of lower lending.

Routledge said data compiled by OSFI suggests the fully phased-in requirements would not lead to a dramatic increase in Canadian bank-capital requirements. The impact would be “many multiples lower than some estimates and is negligible on a net basis,” he said.

Routledge said he was inspired by remarks by Sarah Breeden, deputy governor for financial stability at the Bank of England, who warned banking regulators must avoid “the stability of the graveyard.” 

“We can screw it up if we overdo it, if we overreact to certain challenges,” Routledge said.