February 26, 2016

FT, once again you ignore, God knows why, one of the prime causes for “The precarious state of the global economy”

Sir, I refer to your editorial “The precarious state of the global economy” February 26.

For the record I notify you that you have once again ignored in your analysis the following, God knows for what reason: 

Current credit risk weighted capital requirements for banks, especially in times of scarce bank capital; by allowing banks to earn higher expected risk adjusted returns on equity on what is perceived or deemed to be safe asssets than on risky assets; is hindering banks from lending sufficiently and in sufficiently reasonable conditions to those ex ante perceived as risky, like the SMEs and entrepreneurs. And that must obviously have a big negative impact on the economy.

And seemingly all for nothing, Stefan Ingves, the current chair of the Basel Committee, when as the chair of Sveriges Riksbank, in November 2015, in Svenska Dagbladet commented on Swedish banks had this to say: “Banks have changed the way they calculate risk weights, the risk-weighted capital adequacy therefore look good. But in the end they do not have much more capital than before the financial crisis.”

FT, might your stubborn silence about my arguments have painted you into a corner?

@PerKurowski ©