Thursday, September 15, 2016
The ex post risk of Basel Committee’s bank capital requirements, based on models based on ex ante risk perceptions, is huge!
All these capital requirements do is to seriously distort the allocation of bank credit to the real economy, for no good purpose at all.
Bank capital requirements should be based on ex post risks that considers the risks of models based on ex ante risks perceptions.
Mario Draghi, Mark Carney, Stefan Ingves, Janet Yellen, Martin Gruenberg... Capisci?