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Society clearly prefers the latter.Second, the new capital regime must be harder to game.
This means that financial activities that are functionally banking ones should be regulated under a bank regulatory capital regime.
Damage assessment ReprintsThe appeal of this kind of capital regime is that regulators would be less prone to capture.
European banks which operated only under a risk-weighted capital regime were able to buy those very same assets because they attracted a low capital charge.
Swiss regulators are also unnerved and want a more robust capital regime for the country's big banks.And there is a good case for greater simplicity in bank models.
The E.U. plan includes a streamlined European Research Area and an E.U.-wide venture capital regime designed "to remove bottlenecks which stop ideas from reaching the market".
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They operated with inadequate risk management and capital regimes.
The trick for them will be to handle the liberalisation of capital regimes without wrecking interest- and exchange-rate policy.
By making banks build reserves in good times and reducing their room to get around capital regimes, Spain's regulators drew the right lesson.
Laxer and more fragmented capital regimes allowed the balance-sheets of banks elsewhere to balloon (see chart 4 .Perhaps the most striking divergence between Canada and America is in their regulation of mortgages.
In a similar vein he also attacks capital regimes and deposit-insurance schemes that require banks to raise equity and pay premiums when losses are high.Mr Isaac's account is selective.
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