If bank liquidity will by design not be able to flow where it is needed in Europe, why more of it?

Sir, in “Europe must avoid false optimism” January 9, you recommend: “Mr Draghi should show more urgency, extending for example new liquidity to the banking sector via a fixed-rate longer-term refinancing operation”. For what purpose Sir?

You must know that given the scarcity of capital in the European banking sector, and the risk-weighting of capital requirements, that liquidity would not flow to where it is most needed, and would therefore only worsen the imbalances, like even strengthening “the lethal embrace between sovereigns and lenders”.