Basle II Could Endanger Stability If Cuts In Capital Charges Are Too Big, Says UK Central Banker
LONDON -- Financial stability would be endangered if new capital adequacy rules meant large international banks saw a significant cut in the capital they have to set aside against the risks of banking, a senior UK central banker said in April.
Bank of England deputy governor David Clementi said this may happen if the world’s most important banks were given a large enough "capital carrot" to use the internal ratings approaches for calculating how much capital to set aside against banking hazards.
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