Bailouts unnecessary if Basel II rules were laxer

A minor change to Basel II would have made it possible to restore much of the confidence in the banking industry without governments having to inject capital in the short term, economists have said.

Noel Amenc and Samuel Sender, two economists at the EDHEC business school, argue in a paper published Wednesday that recognising that capital ratios should diminish in an economic downturn, even by 1%, would have made most of the injections of public funds unnecessary.

Since losses lead to a fall

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