Basel’s capital curse

In the aftermath of the financial crisis, the oracles of money and banking have been beating the drums for “recapitalization” – telling us that, to avoid future crises, banks must be made stronger. To accomplish this, governments across the developed world are compelling banks to raise fresh capital and strengthen their balance sheets. And, if banks can’t raise more capital, they are told to shrink the amount of risk assets (loans) on their books. In any case, we are told that one way or another, banks’ capital-asset ratios must be increased — the higher, the better. **Read the full article in the PDF below**

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