I denounce!

Sir I hereby formally denounce that your financial regulators, in following the precepts of the Basel Committee, are causing damage that could prove to be irreparable to your homeland´s economy.

By leveraging the market´s own bias against risk-taking with their own risk-adverseness, they are directly hurting the resilience and the dynamism of the UK economy, as well as its job creating potential, and which as in all other economies is much a direct function of the willingness to take risks. This occurs when, on top of the risk-premiums already charged by the market, they impose capital requirements for banks that are based on an officially perceived risk already known and considered by the market.

The basic capital requirement for banks in Basel II, 8 percent, has proved to be more than sufficient to cover whatever lending or investment exposure the banks had in what was officially perceived as “risky” and the current crisis resulted solely from the extremely low risk-weights that discriminated in favor of the capital returns of lending or investing in what was officially perceived as “not risky”.

In terms of a health-insurance plan, your current financial regulations require that those rated unhealthy, and even though they because of that already pay higher premiums, have to cover for a larger part of the capital requirements of your insurance companies, with the result of then being able to offer even lower premiums to those rated healthy and that already were paying lower premiums. What kind of system is that and what capital reserve cushion will there be if the health-raters miss some symptoms or if a new disease that attack only the healthy strikes?

It is sincerely laughable to read about stress tests performed on banks by bank regulators that have proven not knowing what they do. What is perceived as risky has never ever set off a financial crisis!

You are the Financial Times… do you really not care… how long will you keep a lid on this argument? Do you really think your country will remain strong with your banks regulated by bureaucratic wimps?