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Preventing the next financial crisis is not entirely up to Americans. Some of the world's most important financial rules are written by a little known group in a small European city.

Here's Alex Bloomberg of our Planet Money team.

ALEX BLUMBERG: The town is Basel in northwest Switzerland. And these meetings that are held there are attended by banking regulators from all over the world. But they're close to the press and none of the regulators from the U.S. who go there would talk to me. So here's the one detail I could eek out about where these meetings are held.

Ms. BARBARA MATTHEWS (Managing Director, BCM): They're circular rooms, because it's in a tower. No windows.

BLUMBERG: This is Barbara Matthews, an expert on international banking regulation at a company called BCM, and we'll get to what she was doing in these circular, windowless rooms in a second. But first, some background.

The group that meets in these rooms is the Basel Committee on Banking Supervision. It's made up of banking regulators from 27 different countries, and you can think of what they do this way. Countries pass laws with broad mandates. For example, banks have to be safer by holding more money in reserve. But how much more money? That is where Basel comes in.

Mr. STEPHEN CECHETTI (Economist): These are details, and these are the sorts of things that at least in principle the Basel process works on.

BLUMBERG: That's Stephen Cechetti, an economist at the Bank for International Settlements, home to the Basel Committee. And Cechetti says these details, there is a lot of fighting about them.

Mr. CECHETTI: You have to think about regulation as an arms race.

(Soundbite of laughter)

Mr. CECHETTI: You're laughing, but I'm serious. And the arms race is between the regulators and the supervisors on the one side and the banks on the other side. So every day the banks wake up looking for a way around it and the regulators and the supervisors look for a way to try and contain the next thing they do.

BLUMBERG: And that brings us back to Barbara Matthews, who you heard at the beginning talking about the windowless circular rooms. She was in those rooms as part of her old job, as a lobbyist for the international banking industry. And she says you might not have heard of Basel, but the bankers, they sure have.

And they're pretty nervous about this next set of rules. That's because to make the banking system safer means making it harder for banks to lend money. That means bankers themselves make less. It also means a lot of things are slightly more expensive for the rest of us - mortgages, credit cards; it might be a little harder for businesses to expand, to hire people. And Matthews says for the regulators at Basel the costs are worth it.

Ms. MATTHEWS: The overriding perception is the banks were too free with their money to begin with - that's part of what helped get us into this mess. And so the regulators from around the world are looking to make it harder for banks to lend. It's a classic, classic argument about how safe do you want to be and what is the cost of safety. The economists are duking this out right now.

BLUMBERG: Of course they're not duking it out with their fists - that's not the way economists do things - but with macroeconomic forecasts.

In this corner: a massive study, 157 pages long, from Barbara Matthews, former employer of the Institute of International Finance, saying the new Basel rules will result in lower economic growth, and fewer jobs created. But in the opposite corner: a newly released paper by the Basel Committee that argues, in fact, increasing safety standards will increase economic growth in the long term, partly by avoiding lengthy recessions, like the one we may or may not be emerging from right now.

Of course, both of these studies are weapons in the ongoing arms race over financial reform taking place maybe right now in a windowless room in Switzerland.

For NPR News, I'm Alex Blumberg.

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