The first Basel agreement on global banking regulation, adopted in 1988, was 30 pages long and relied on simple arithmetic. The latest update, known as Basel III, runs to 509 pages and includes 78 calculus equations. The complexity is emblematic of what happened over the past four years as governments that injected US$600 billion to rescue failing banks during the worst financial crisis since the Depression devised ways to make the global banking system safer. Those efforts have been stymied by conflicting laws, divergent accounting standards and clashing rules adopted by countries to protect their interests, all of which have created new risks. "They're like a bunch of bumper cars," Karen Shaw Petrou, managing partner of Washington-based research firm Federal Financial Analytics, said of the new banking regulations. "On their own, each might do some good things, but they bump into each other over and over. That could render them useless, or worse, perhaps harmful." While higher capital requirements, curbs on banks' trading with their own money and other rules have reduced risk, they have magnified the complexity of supervision, according to two dozen regulators, bankers and analysts Bloomberg interviewed. Even if the new regulations could be enforced, they didn't go far enough to ensure safety, said Robert Jenkins, a member of the Bank of England's financial policy committee. "Imagine that until 2007, the rules of the road permitted heavily laden fuel trucks to barrel through urban streets at 100 miles per hour," Jenkins said. "After a number of catastrophic mishaps, the establishment decides to reduce the speed limit to 75 miles per hour in school zones. Have we tightened the rules? Yes. Have we tightened them enough? No." One reason the trucks have slowed is that the 27 countries represented on the Basel Committee on Banking Supervision agreed in 2010 to require banks to hold more capital, or shareholders' money, to absorb losses. Dozens of countries, including the United States, have issued other regulations or passed laws to curtail risk, and lenders have boosted capital and improved its quality since the crisis. Trading of most derivatives, an opaque US$639 trillion market, is being forced on to central clearinghouses, where transactions are backed by collateral. The Volcker rule, part of the 2010 Dodd-Frank Act, Britain's proposed Vickers rule and a European Union version named after Bank of Finland governor Erkki Liikanen seek to separate riskier trading from other businesses. Seven countries have created resolution mechanisms for an orderly shutdown of their biggest lenders if they fail, according to the Basel, Switzerland-based Financial Stability Board. Still, the global financial system remains vulnerable. Only 11 of the more than 100 countries that vowed to adopt the latest Basel rules met a January 1 deadline to start implementation. The US and the EU, each of which drafted 700-page proposals, are still debating them. The new capital rules are based on the same principle as the old ones: allowing the largest lenders to use their own mathematical models to determine how much capital they need. The calculations, which assume the banks can predict what's risky, could involve millions of variables, making them difficult for examiners to review, a report by the Bank of England in August said. Moving derivatives trading to clearinghouses may concentrate risk and make those marketplaces too big to fail, requiring government rescues. Rules named after former US Federal Reserve chairman Paul Volcker and former Bank of England chief economist John Vickers may not succeed in curbing risk. US regulators are still debating where to draw the hard-to-see line between trading and making markets for clients as required by the Volcker rule. Volcker himself has questioned the effectiveness of Vickers's proposal to insulate trading units. A cross-border mechanism for winding down failed banks with operations in multiple countries remains elusive, as does the universal adoption of a liquidity requirement that would force the companies to have enough easy-to-sell assets on hand if panic hits and funds flee. Meanwhile, banks considered too big to fail have got even bigger since the financial crisis. The 22 largest lenders in the US and Europe have increased assets by 26 per cent since 2007, according to Bloomberg data. "It has gotten ridiculous, far too complicated," said Wayne Abernathy, executive vice-president of the American Bankers Association. "The costs and efforts of complying with all these rules no longer are worth the safety and soundness dividend they provide." The Securities Industry and Financial Markets Association, another lobbying group, estimates regulators will end up writing 29,000 pages of directives once Dodd-Frank is fully in place. Basel III was the culmination of an international effort among nations to overhaul the global financial system after the 2008 crisis. Now, while leaders of the Group of 20 nations continue to talk about co-operation, governments from the US to Switzerland are acting unilaterally to protect their taxpayers from future bank losses. The Fed last month proposed that foreign lenders organise their US units as subsidiaries and hold capital independently from their parent firms to make it easier for US regulators to seize local assets in a crisis. Switzerland, where the banking system is five times the size of the nation's economy, moved in 2010 to give priority to the resolution of the domestic units of its two largest banks, UBS and Credit Suisse, in the event of a failure.