WASHINGTON (Reuters) -The Federal Reserve's top regulatory official cautioned Thursday against a weakening of bank rules and oversight that could make firms vulnerable to surprise shocks.

Fed Vice Chair for Supervision Michael Barr, who is stepping down from the regulatory post at the end of February, cautioned against any push to significantly weaken existing bank rules and supervision, and urged watchdogs to complete international capital standards.

In what is expected to be his final speech as the Fed's rules chief, Barr maintained that strong rules and robust capital requirements for banks are needed to guard against unforseen shocks. Barr intends to remain on the Fed board as a governor.

"We cannot fully appreciate how a specific vulnerability can interact with other vulnerabilities to amplify and propagate risk in the face of shocks, let alone accurately anticipate shocks in time to avoid them," he said in prepared remarks.

Specifically, Barr urged the Fed and other bank regulators to finish the job in implementing so-called "Basel III Endgame" capital rules. Barr spent most of his tenure pushing for a set of rules that would have drastically hiked big bank capital requirements by overhauling how firms measure risk, but intense industry opposition ultimately saw that effort subside and remain unfinished.

Barr warned that a failure to complete those rules, which are part of a global regulatory agreement, would disadvantage U.S. banks, and could spur a "race to the bottom" as other nations seek to avoid enforcing similar restrictions.

Barr also urged caution on further weakening of another major Fed regulatory tool -- its annual stress test of large banks. The Fed announced late last year it planned to make the process more transparent in light of recent rulings placing additional restrictions on regulatory powers at government agencies.

Firms have long complained the tests are opaque and subjective, but Barr cautioned that regulators should work to ensure any effort to improve visibility into the tests should not result in lowering bank capital requirements. He also warned that a more intensive process to publicize and refine the stress test each year could make it less dynamic, further reducing its efficacy.

While Barr will remain at the Fed, it remains unclear how far the warnings will carry. The Trump administration has said trimming regulatory burden is a top priority, as part of its bid to further spur economic growth. A replacement to fill his position has yet to be named.