Swiss Support Progressive Bank Capital Requirements

Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, provided introductory remarks at the half-yearly media news conference, Geneva, 17 June 2010:

It is essential that capital requirements be significantly increased and that they rise in line with the degree of systemic importance of a bank. This is the only way to ensure that the banks internalise the risks which, until now, they have been able to pass on to the general public, to some extent. Moreover, progressive capital requirements should create an incentive for banks to reduce their systemic importance, with its associated risk potential.

Bravo! Capital surchages have long been advocated on PrefBlog and will serve not just to discourage banks from becoming too big, but will also act as a countercyclical buffer … and the question of countercyclical buffers is one that seems to have been relatively neglected lately.

Bank capital surcharges were last discussed on PrefBlog in the post Bank Capital Surcharge Proposals Gaining Ground.

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