In reforming the financial system, authorities face a basic trade-off: girding institutions against another cataclysmic breakdown through tougher capital and liquidity requirements on the one hand, and helping the flow of credit amid a fragile recovery on the other.

Proposed international guidelines designed in part to position banks to withstand a monthlong liquidity crisis — including a severe run on deposits, an evaporation of short-term funding and heavy draws against credit lines by borrowers — are a stark example of the tension, according to Rajiv Setia, a bond analyst at Barclays Capital.

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