July 17, 2018

For transparency, all candidates to chair ECB’s Single Supervisory Mechanism, should publicly answer one question.

Sir, I refer to Claire Jones and Rachel Sanderson reporting on the selection by the European Central Bank, of the person to substitute for Danièle Nouy as the chair of the Single Supervisory Mechanism. “ECB banking watchdog seeks new chief” July 17.

A major turning point for our Western world liberal order, in truth for our whole civilization, was when regulators, surprisingly, 1988, with no one questioning them, decided that what is perceived as risky is more dangerous to our bank system than what is perceived as safe, and proceeded to apply such nonsense with their risk weighted capital requirements for banks.

We have already paid dearly for their stupidity, which excessively boosted bank exposures to AAA rated securities, house mortgages and sovereigns (like Greece), and has made it harder for SMEs and entrepreneurs to access bank credit.

Therefore, in the name of that transparency we all deserve, which of course includes all at the Financial Times, all candidates to chair ECB’s Single Supervisory Mechanism should give their public and reasoned answer to the following question: 

What is more dangerous to our bank system, that which is perceived as risky, or that which is perceived as safe?

Will those involved in the selection process, and who might clearly have a vested interest in it remaining a question that shall not be asked, dare to ask it?