Basel Committee’s bank regulations have empowered populist demagogues everywhere.

The world needs to understand how Basel Committee’s bank regulations have empowered populist demagogues of all shape, color or form, everywhere.

Sir, I refer to Martin Wolf’s “The hard task of exiting the populist trap” Financial Times, October 22, 2025.

Mr. Wolf writes: “We live in an age of populist dem­agogues. This is not a new phe­nomenon. Plato used the word “dem­agogue” in his cri­tique of democracy in The Repub­lic. He was cor­rect that demagogy is the Achilles heel of demo­cracy… How damaging is illus­trated by the fate of Argen­tina, a coun­try that has been plagued by populism since the rule of Hipólito Irigoyen in 1916.”

Sir, if the Basel Committee’s “We know enough about risks and so to make your banks safe, we give you our risk weighted bank capital/equity requirements”, is not a pure example of populist demagoguery, what is?

And with it, 1988, they de facto decreed that the populists/bureaucrats governing know better what to do with public debt, for which repayment they’re not personally responsible for, than the farmers, small businesses and entrepreneurs do with their bank loans.

Wouldn't Argentina’s Juan Domingo Peron have loved it? Of course, he would.

Sir, I ask, is that not a trap into which most of the world has fallen into? Anyone truly wanting to help Milei should look at it as a mutual problem and not one of which Argentina is supposed to climb out from on their own.

FT could be helpful if it begins to explain, without fear and without favour, how much Basel regulations distort the allocation of bank credit and with it, de facto, central banks’ monetary policies. 

Is it not a good time for that? Look at what is happening to all other economies, UK included. 

@PerKurowski

How do you protect your portfolio from the technocratic populists and demagogues, like those of the Basel Committee?

Sir, Gillian Tett writes about populism, protection and regulations and tells us “Protect your portfolio from the populists” May 6.

And so I would ask her how could we protect our portfolio from the populism and demagoguery of our bank regulators, the Basel Committee and friends?

With the risk weighted capital requirements they tell us they are making our banks safer. Just the term “risk-weighted” transmits the notion that risks have now been cleared for.

I can see a regulator standing there on a balcony in Basel and, in the best Peron style, voice out loudly “We will risk-weigh, we will risk-weigh, we will risk-weigh your banks”. And I can also see the audience, including too many from FT, fascinated, in trance, responding with admiring and adoring “Viva!”

But the only thing that risk-weighing does, is to allow banks to earn higher risk adjusted returns on equity for assets perceived, decreed or concocted as safe than for assets perceived as risky. And so that means banks will now lend too much and at too low rates to the “safe” and too little at too high relative rates to the “risky”.

And it is all so sadly stupid, because if there is any risk already weighted for in banking that is the perceived credit risk.

And so if understanding that this distortion of the allocation of credit will be bad for the real economy, and that, sooner or later, some safe-havens will become dangerously overpopulated, what does one do?

Of course while technocrats with QEs, negative interests and similar insist on stimulating the economy, the value of many assets, those not included in inflation basket, will inflate. But, long term we know that without a sturdy real economy to back these assets up, these will also suffer.

Sir, no matter what Ms. Tett might think, I assure you it is probably much easier to protect your portfolio against ordinary populists, than against these the technocratic populists and demagogues.

"We will risk-weigh your banks!"

"Peron, Peron, Peron!"

@PerKurowski ©