Saturday, June 16, 2012

My urgent proposal for the capital requirements for banks

I propose that regulators urgently calculate any individual bank´s capital to total assets ratio, and ask for it to apply a capital requirement that increases ever so slightly over a fairly long time on any new asset it acquires… until reaching some basic goal, like the original 8 percent of Basel II, but more real. 

That way we should be able to put our banks on a stronger footing to lend, with so much less distortion.