June 11, 2014

The real hair-raising déjà vu is that risk weighted bank capital requirements of Basel II survive in Basel III.

Sir, John Plender refers to the Institute of International Finance and their looking at “the asset to GDP ratio” arguing “the risk that unless growth accelerates significantly in the future, economic growth will not create sufficient resources to service the developed world´s huge pool of assets, whose value will therefore have to correct at some point of time”, “Déjà vu as echoes of pre-crisis world mount” June 11.

Indeed but unfortunately there is not a chance in a million that growth will accelerate significantly in the future, if regulators keep discriminating against the fair access of “the risky” to bank credit.

In fact the real hair-raising déjà vu is seeing that Basel III still uses risk weighted capital requirements, those bound to discriminate against the “risky” risk-takers we risk adverse so much depend on.