We need bank regulators to be more like lions and less like scared of mice kittens.

Sir, Ralph Atkins’ writes that “Across most of the Eurozone governments can borrow at historically low costs” and I wonder whether he is not comparing apples with oranges, “Financial system is a flighty animal in search of its inner lion” January 2.

The low interest costs he sees are not all the costs there are. The current risk weighted capital requirements for banks, which so much favor bank lending to the “infallible sovereigns”, have introduced huge distortions, which guarantee that capital will not be allocated efficiently; and which final costs could be equally humongous.

He should ask a Greek. Had banks needed to hold as much capital when lending to Greece’s government than what they needed to hold when lending to a small Greek business, then Greece would not have suffered such a build up of excessive sovereign debt and would not be in the mess it is in.

Today, in FT’s and Atkins’ Britain the interest rates on Britain’s public debt is being subsidized by many small businesses or entrepreneurs, through by paying higher relative interest rates or by having less access to bank credit… let us pray the costs of that will be manageable.

Sir, Atkins has no business asking the financial system for its inner lion, when so many problems derive from that regulators have turned into kittens so risk adverse they do not even dare to chase mice.

That this kitten has been able to tame the western markets making them lose “much of their lion-like abilities” should evidence the dangers of empowering kittens with too much regulatory powers.