February 21, 2018

If with Brexit Britain can break lose from Basel’s bank regulations, then it could come up on top of EU

Sir, Martin Wolf writes: “The recently leaked UK government analysis concludes that with Brexit, under a Canada-style deal, UK gross domestic product might be 5 percentage points lower than it would otherwise be, after 15 years — a loss of about a fifth of the potential increase in output by that time”, “Britain’s road to becoming the EU’s Canada”, February 21.

Has someone in the UK government analyzed what long term impact on UK’s gross domestic product the risk weighted capital requirements for banks have? I mean because since this regulation gives banks great incentives for staying away from financing the riskier future and just keep to re-financing the safer present, that most be causing some serious costs for the future.

Again, any bank regulations that is so stupidly based on the assumption that the ex ante perceived risks reflects adequately the ex post danger to the bank system, has to turn out incredibly costly.

So, if Brexit allows Britain the opportunity to break lose from these regulations, and Britain capitalizes it, while EU stay hooked on it, then Britain could come up over EU, and many in Europe would want to Baselexit too.

Why, when the world is going through so many not entirely understood changes, should Britain limit itself to cry over what it can lose with Brexit, while giving so little consideration to what it has to win, with our without EU?