Mario Draghi, a risk adverse regulator, now wants banks to increase lending to the risky real economy. Inconsistent!

Sir, I refer to your “Monetary policy is not enough to beat deflation” March 15.

You write that Mario Draghi holds “there is still plenty of scope for central banks to innovate by extending their asset-purchase programs to riskier assets and finding ways to support banks that increase lending to the real economy”.

Mario Draghi is a former chair of the Financial Stability Board and the current chair of the Group of Governors and Heads of Supervision that govern the Basel Committee.

He has therefore fully supported the risk weighted capital requirements for banks.

Those give banks much incentive to stay away from what is perceived as risky and to embrace what is perceived as safe.

Sir, so don’t you think that Draghi now pushing banks to venture more into the realms of risks is being extremely inconsistent? Why not just abandon the bank regulatory distortion of the credit allocation to the real economy?

@PerKurowski ©