Onado, M., (2014), “European banks: Between a rock (need of more capital) and a hard place (low profitability)”, VoxEU, 23 Φεβρουαρίου.
The financial crisis has put to the forefront the long-debated issue of banks’ capital adequacy, showing that banks were much more fragile than they (and their regulators) pretended, also because they were allowed to push their leverage to levels much higher than any industrial company, or even a hedge fund, has never dreamt of.
Since then, both governments and the markets have contributed to a substantial increase of banks’ capital in all countries, the Basel regulation has been thoroughly revised, and at long last a cap on banks’ leverage has been introduced. Regulators, both in the US and Europe, are now focussed on convincing the markets that banks are currently robust enough to weather significant external shocks, either macroeconomic or financial. The stress tests that the US ran for the first time in 2009, and Europe will replicate in 2014 (after the overdue realisation of the Single Supervisory Mechanism), are the exercise that should prove that the situation is now under control. In this way, at least for the banks, the horror movie of the financial crisis could find a happy end.
Σχετικές Αναρτήσεις
- Visco, I., (2013), “The aftermath of the crisis: Regulation, supervision and the role of central banks”, Centre for Economic Policy Research, Policy Insight No.68, December.
- Jordà,O., Schularick, M. and Taylor, A., (2013), “Sovereigns versus banks: Crises, causes and consequences”, VoxEU, 18 Οκτωβρίου.
- Greene, M., (2014), “The Eurozone’s Imperfect Banking Union”, Open Markets, 20 Φεβρουαρίου.