Europe, before aiming at the dragon with unconventional QE, go back to conventional bank regulations which do not distort.

Sir, I refer to your “Taking aim at the dragon of deflation” in which you so much favor QEs of any kind, even if you would have to, quite shamelessly, twist the obvious intentions of European law, April 5.

Deflation is a much a result of retrenchment, retrenchment in much a result of risk aversion, and Europe’s current risk aversion very much the result of capital requirements for banks, which allow these to earn higher risk-adjusted returns on equity when lending to “the infallible” than when lending to “the risky”.

Those highly unconventional bank regulations are poisoning Europe and so, before digging Europe further down into the ground, with for example QEs, you must return to conventional bank regulations that do not distort the allocation of bank credit to the real economy.