Regulators should require lenders to set aside more capital in an economic upswing but be allowed looser standards in a downturn, Sir John Gieve, deputy governor of the Bank of England, said on Wednesday.

“We need to consider again how far we can ... create a system which raises requirements as the boom gathers pace in order to dampen the upswing and create additional headroom for losses as the cycle turns,” Sir John said in a speech before the Euro-money Bond Investors Conference in London.