April 29, 2013

Bank rules already hinder inclusion and widen the gap

Sir, Alfred Hannig in his letter “Rules shouldn’t hinder inclusion” writes about the importance of finding a balance in financial regulations between the need of protecting the banks from systemic risks and the need for the inclusion of those currently without access to the financial system. And he is of course right when holding that “infection in the financial system will not come from financial inclusion” just the same way that a financial crisis will never result from excessive exposures to “The Risky”, these will always come from excessive exposures to what has erroneously been considered a member of The Infallible”.

That said Mr. Hannig should take notice that current bank regulations, with their capital requirement based on “perceived risks” already cleared for by means of interest rates (risk premiums) amounts of exposure and other terms, already attempt against the inclusion of many; and only helps to further widen the gap between the haves, the old, history, the developed, “The Infallible” and the have-nots, the young, the future, the developing, “The Risky”.