The latest wrong-headed proposal will be announced by the Bank of England on Friday: it is set to impose a much stricter leverage ratio on the industry than recommended by the Basel Committee, the international rule-setter. For a start, there ought to be no need for such a ratio at all – the much stricter rules on capital and liquidity that have already come into force, combined with the elimination of moral hazard triggered by the new resolution mechanisms, ought to be enough to reduce risk in the industry to a more rational level.
It gets worse, however. Banking sources expect the new UK leverage ratio to come in somewhere between 4pc and 5pc, above the minimum 3pc ratio recommended by the Basel Committee on Banking Supervision, the global watchdog. So not only are the new rules inherently bad, they will actually be implemented in the worst possible way.
The post Authorities are about to crack down on banks again – but it’s you who will feel the pain appeared first on Trunews:.
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