Every financial debacle that takes banks down is an open invitation for governments to impose regulation with the aim of preventing a reoccurrence. The financial crisis of 2008 was no exception. Unfortunately, revisions in the banking environment generally end up with unintended consequences, and they are far-reaching. The regulation in question are designed to reduce a banking system vulnerably to being caught with insufficient liquidity in a market-driven flight to cash. (It’s something that Deutsche Bank no doubt should be thinking about at this time.) All this is explained in Part 1 of The New Monetary Ballgame, which is a …
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