Tuesday, July 23, 2013
Even though absolutely all major bank crisis have resulted from excessive exposures to what was ex ante perceived as absolutely safe, and none from excessive exposures to what was ex ante perceived as risky, current capital requirements for banks are much higher for what is perceived as risky than for what is perceived as safe. And that sounds quite curious indeed.
And one could have thought that financial journalists, like those at the Financial Times, would find that sufficiently curious so as to at least ask a bank regulator for a satisfactorily understandable explanation.
But no, they do not. Is not that quite curious too?