WASHINGTON — A proposal by banking regulators that would increase the amount of capital banks must hold against assets could discourage banks from buying municipal bonds, the Securities Industry and Financial Markets Association warned Monday.

In three comment letters filed with federal regulators, SIFMA urged changes to muni-related provisions in proposed international capital requirements, known as BASEL III. The letters were sent by SIFMA to Federal Reserve Board chairman Ben Bernanke, Federal Deposit Insurance Corporation acting chairman Martin Gruenberg, and Comptroller of the Currency Thomas Curry,

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