September 15, 2016
Sir, Elaine Moore writes: “British debt — one of the oldest securities in the world whose roots can be traced back to King William III’s desire to fund a war in France — should be relatively straightforward. Domestic and international investors regard the UK as a safe bet” “FT Big Read: UK Gilt complexities” September 15.
Moore ignores here the effect of current bank regulations but I must say, to me, as an outsider, it is truly hard to understand how, in these days, the British people allow the Basel Committee to assign them a risk weight of 100% while giving the AAArisktocracy one of only 20% and the Sovereign a 0%.
Where would Britain have been today had these risk weights, that clearly discriminate against the access to bank credit of SMEs and entrepreneurs, been in place since King William III’s days?
Don’t you think that your governments have it easy enough to sell gilt without having to give it this regulatory subsidy?
I wonder if anyone at BoE has given the slightest thought to where interest rates on new gilt sold would be, without a little help from the Basel Committee?
Sir, doesn’t anyone in FT know that the “little help” is paid by the lesser or more expensive access to bank credit of some other?