Since you cannot put up a Leave Britain to referendum, you must force your Parliament to act more forcefully in EU

Sir, Chris Giles, fighting Brexit argues: “some [EU] economic officials have been granted constrained powers to take decisions for the public good… Competition authorities help arrange the playing field on which companies compete. Parliament’s ultimate sovereignty comes in the ability to remove these powers”, “Economists’ rare unity highlights the perils of Brexit” June 16.

But the problem is that many EU issues are considered so remotely, and in such convoluted ways, that parliaments are often not even aware of what is happening.

As an example, and though it is not directly a EU authority, let me refer to the Basel Committee for Banking Supervision.

The BCBS imposed de facto credit risk weighted capital requirements for banks which meant banks could hold assets perceived or deemed as safe against less capital that assets perceived as risky. And introduced a distortion of the playing field where borrowers compete for bank credit. 

What would the chances of the following proposal having been approved by any European parliament?

“By means of regulations, and in order to make our bank system safer, we propose to help banks earn much higher risk adjusted returns on equity when lending to what is safe, like to sovereigns, the AAArisktocracy and the financing of houses; and so that they are given good incentives to stay away from lending to what is risky, like to SMEs, entrepreneurs and citizens in general”

I bet no MP would have even dared to present such proposal for consideration.

And just think of proposing what the Basel Accord of 1988 decided: “The risk weight of the sovereign (the government) is zero percent and that of citizens 100 percent”

But since BoE, where Mark Carney is the current Chair of the Financial Stability Committee, and all other locals involved seem to agree with the above mentioned distortions, you are facing much more than a stay or leave EU issue.

Since you cannot solve it by putting a Leave Britain up to a referendum, you better get your Parliament to work on issues like this, hurriedly, come what may.

I would suggest you start by asking Mark Carney why he feels it is adequate that those assets rated below BB-, speculative or worse, and to which banks would never ever voluntarily create excessive exposures to, should have a risk weight of 150%, while the AAA to AA rated assets, those to which excessive exposures is precisely the stuff that mayor bank crises are made of, these have only a risk weight of 20%.

PS. “Rare unity” between economists does not have to mean they are right. EU is full of problems and I have not seen economists considering much the possible unexpected consequences of a strong rejection of Brexit.

PS. For full disclosure I also belong to those who have had enough with at least quite many of the experts.

@PerKurowski ©