And the winner of the denovation prize is… The Basel Committee for its risk weighted capital requirements for banks!

Sir, I refer to Tim Harford’s discussion of the role of prizes in fostering innovations “Eyes on the innovation prize” November 28.

Personally I have often argued for establishing a prize for promoting innovative ideas about how to regulate banks, without interfering with their purpose of allocating credit efficiently to the real economy.

As is, current bank regulations that so much favor what is safe from a credit risk point of view, usually what already exists, over that which is risky, usually that of which the future is built of, is as a powerful blockage of innovations that one could think of.

In this respect, bank regulators would no doubt be declared winners of any denovation prize, if it existed. They would in fact be the unchallenged denovation champs ever since Basel II of 2004, most probably, no certainly, already since Basel I of 1988.

@PerKurowski ©