Regulators must not be too strict in a crisis – BIS paper

Dan Hinge

Policy-makers setting capital buffers are well-versed in the need to increase capital in good times, but they may not be willing enough to allow leniency during downturns, a new working paper finds.

Macroprudential policy with capital buffers, published by the Bank for International Settlements on February 22, finds it is “crucial” that after a crisis banks are allowed to rebuild their equity slowly.

Author Josef Schroth says giving banks a “stake in the recovery” from a credit crunch by

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