Aug
14
Turkey Will Put Capital Rules to the Test
ByA much-touted remedy for financial risk may not be up to the task.
Turkey’s economic and political conniptions have driven a significant sell-off in European bank stocks. This meltdown may illuminate a deeper question about regulation: whether more capital makes banks or the financial system resistant to periodic crises.
Additional capital requirements were the primary regulatory response to the financial crisis of 2008. Global systemically important banks now must increase their total loss-absorbing capacity over time to at least 18 percent of risk-weighted assets and 6.75 percent of unweighted exposure…
