Banks capital adequacy ratios were set globally, and, once set, remained fixed.

None of the major banks met even the Basel 1 standards for capital adequacy.

There seems to be little appetite for proposals to vary capital adequacy requirements counter cyclically.

As is frequently pointed out, unless banking regulations are identical across frontiers, there will be plenty of scope for regulatory arbitrage.

Similarly, banks would have incentives to game capital adequacy requirements by manipulating how capital and assets are defined.

The recent agreement by the Basel Committee on Banking Supervision on a new capital adequacy framework is another positive step.

First, sovereign bonds held by banks are treated as risk free assets under EU rules for calculating banks solvency and capital adequacy levels.

Combined with elevated capital requirements for banks, it would reduce the chance of another simultaneous failure of all credit channels.

The Basel III agreement on capital adequacy and other recent reforms still have not ring fenced trade financing from these potential shocks.

Rules are rules.

Many eurozone banks have made far less progress in strengthening their capital adequacy and liquidity than have American and British banks since the financial crisis erupted.

Higher capital ratios, lower exposure to bad loans, and more transparent balance sheets increase the chances that the ECB s quantitative impulses will be transmitted to the wider economy.

Smarter capital requirements better Basel rules aren t the answer. Rigid, top down uniformity is essential in the specification of weights and measures and the issuance of currency and coin.

Smarter capital requirements better Basel rules aren t the answer.

In this way, the new Basel rules allow for requiring banks to maintain a so called countercyclical buffer of extra capital.

Second, new capital ratios with multiple and decreasing capital thresholds, which trigger increasingly intrusive corrective action, should serve as the basis for a new system of mandated supervisory action. Supervisors should be bound by a presumption that they will act.

Keeping those loans on the books would have meant that a bank would have had to incur a large capital adequacy provision and monitor the loans performance, at a cost to itself.

Second, new capital ratios with multiple and decreasing capital thresholds, which trigger increasingly intrusive corrective action, should serve as the basis for a new system of mandated supervisory action.

Rules

In his recent speech to the annual, elite central banking conference in Jackson Hole, Wyoming, the Bank of England s Andy Haldane made a forceful plea for a return to simplicity in banking regulation. Haldane rightly complained that banking regulation has evolved from a small number of very specific guidelines to mind numbingly complicated statistical algorithms for measuring risk and capital adequacy.

Haldane rightly complained that banking regulation has evolved from a small number of very specific guidelines to mind numbingly complicated statistical algorithms for measuring risk and capital adequacy.

Such countercyclical capital requirements are likely to be added to the toolkit of macroprudential rules and policies, the use of which has risen as enthusiasm for light touch financial supervision has faded.

The Rules of Reconstruction

The Rule of the Lawless

Former title of the Agreement

Agreement Concerning the Adoption of Uniform Conditions of Approval and Reciprocal Recognition of Approval for Motor Vehicle Equipment and Parts, done at Geneva on 20 March 1958.

CSS Rules

Here are the rules.

What are the rules?

I hate rules.

There are rules.

There are rules.

These are the rules.

Follow the rules.

Follow the rules.

The rules are clear.

Do you know the rules?

The rules have changed.

The rules have changed.

The rules are simple.

Do you know the rules?

And so they've come up with their own set of rules, the Rules of the Internet.

Any rule in the game, including the rules specifying the criteria for winning and even the rule that rules must be obeyed, can be changed.

Capitals of Capital

Capital flight