January 17, 2015

For Basel IV should we not expect equity requirements for banks based on regulation and central banks risks?


Sir, I refer to John Authers’ “Lessons to be leant from Switzerland doffing its cap” January 17.

Whatever, this really places the fact that regulators and central banks impose credit-risk-weighted equity requirements for banks, when they themselves are the source of so much risks, in a totally new perspective.

Frankly, it must be much easier for banks to clear for credit risks by means of interest rates, size of exposure and other contractual terms than what it can be for them to clear for regulatory and central bank risks.

And so for Basel IV, we must now expect equity requirements for banks based on regulation and central banks risks… what a conflict of interest for regulators and central banks! That might indeed seriously affect the friendly collegiality that reins in their mutual admiration club.

Basel Committee, do we now need trustworthiness of central banks ratings?

Financial Stability Board, what trustworthiness ratings would you assign to Draghi-ECB or to Carney-BoE?