Currently, more than central banks, it is bank regulators who help pump up the bubbles

Sir, John Plender is absolutely correct when he writes “the excessive exposure of banks to government debt market creates serious systemic risk. And when the central banks stop buying it is a safe bet that few private sector investors will be prepared to step into their shoes at anything like today’s rate”, “Central Bank hot air pumped up the bond bubble” January 30. 

But he is not right blaming that bubble solely on the central banks since, as I have been protesting for over a decade now, that bubble is also inflated by the silly low capital requirements banks need to hold when lending, for instance, to “infallible sovereigns”.