BeforeItsNews only exists through ads. We ask all patriots who appreciate the evil we expose and want to
help us savage the NWO with more Truth to disable your ad-blocker on our site only so we can grow and expose more evil! Funding
gives us more weapons! Thank you patriots! Oh and If you disable the Ad-blocker - on your deathbed you will receive total
consciousness. So you got that going for you...which is nice!
IMF, where’s the regulators’ discipline when needed to stop the procyclical risk weighted capital requirements for banks?
Wednesday, April 3, 2019 16:26
% of readers think this story is Fact. Add your two cents.
Sir, Chris Giles writes that IMF’s Christine Lagarde warning about “70 per cent of the global economy to experience a slowdown in growth… acknowledged that budgetary discipline in good times was difficult for finance ministers to achieve, but necessary to create “fiscal space to act in bad times”. “IMF Lagarde highlights risks to global economy” April 3.
Times are good, lesser the perceived risks; less the capital must banks hold; even though it is a good time to raise bank capital.
Times are bad, higher the perceived risks; higher the capital must banks hold; even though it is a bad time to raise bank capital.
But are regulators doing something to diminish this regulatory pro-cyclicality? No, or absolutely not enough. Why? Because doing so would require to admit that their risk weighted bank capital requirements are based on the nonsense that what is perceived as risky, when place on banks’ balance sheets, is more dangerous to the bank system than what is perceived as safe.
Sir, that slow down Ms. Lagarde speaks of is much the result of the obese growth that results from excessive exposures to what is perceived as safe. Muscular, sustainable growth requires, by definition, a lot of risk taking.