BIS Review 73/2002  1  For one, the lower bound on nominal interest rates at zero threatens ever-rising real rates if deflation intensifies. A related consequence is that even if debtors are able to refinance loans at zero nominal interest rates, they may still face high and rising real rates that cause their balance sheets to deteriorate.
For now though, I will say that we believe that there are few efficiency gains to be made by going beyond the current proposal of 18% (or 17%). The level of capital we think is needed to meet our soundness objective has also addressed the potential to increase stability without adversely impacting on long-term output.