Throwing Basel II, III, out of the window, is the best way to free us from the too risky risk-adverse bank nannies.

Sir, William Rhodes makes many valuable and correct suggestions in “The time has come to end the eurozone´s ad hoc fixes” November 27. 

The most important is when he reminds us about the need to “reformulate the balance of regulation in favour of enabling the banks to lend more to small and midsized enterprises, which are the prime job creators in most economies” and suggests this can only be the result of a banking union that “can separate banks from sovereigns”. 

But, in my opinion this is too an important and urgent goal so as to have to wait for a banking union. It could be much faster attained by simply throwing Basel II and III out of the window and getting us some new bank regulators; some who understand and give importance to the function of banks in allocating economic resources in an efficient way. 

Banks, like those William Rhodes worked in, used to give the loans or make the investments in whatever produced them the highest risk and transaction cost adjusted return on their equity. 

Unfortunately though, the current generation of bankers, start out doing the same, but they now have to adjust it for the different capital requirements based on perceived risks regulators impose. 

And that simply means that most bank credit will go to “The Infallible”, with low capital requirements, and that “The Risky”, like those small and midsized enterprises Rhodes fondly speaks of, are because of higher capital requirements, effectively locked out from access to bank credit on competitive terms.