Forcing banks to play it safe is a very dangerous game that dooms Europe and other

Sir, you argue that “Super Mario is doing what he can” and that “The politicians cannot expect him to achieve a sustained recovery on his own”, but yet again you fail to mention the need for bank regulators to stop distorting the allocation of bank credit, “Draghi and the challenge of great expectations” December 4.

When you allow banks to leverage more with assets perceived as safe than with assets perceived as risky, you give what is perceived as safe an unfair advantage when it comes to access to bank credit, which results in denying a fair access to bank credit to what is perceived as risky. And that kind of dumb playing it safe causes of course a very dangerous distortion in the allocation of bank credit.

European and other banks have been given by the Basel Committee the incentives to act scared of credit risks, which means the real economy will not get the bank credit it needs; and which means that the banks exposure to what is perceived as safe will be dangerously big.

And I am truly amazed this is not even an issue for the Financial Times. When and why did you decide to make bank regulators your protégées? Martin Wolf has told me in clear terms he does not believe those capital requirements distort. He is completely wrong and I find it hard to believe that the whole FT has to follow his lead.

PS. Your Super Mario does not understand this either or, as a former chair of the Financial Stability Board, he is doing whatever it takes for not having to admit a mistake.