Regulators double down

It might be argued that trying to formulate a reliable quantitative estimate of extreme, low-probability tail risk for banks is futile. If true, this raises serious questions about the wisdom of developing a more complex Basel III capital framework, argues David Rowe

Despite the difficulty we all experience dealing with complexity – especially new and untested forms of complexity – most of us feel the benefits far outweigh the costs. Sometimes, however, complexity can outrun the safeguards designed to limit its adverse side-effects. In such instances, the unintended negative consequences can be dramatic. In one sense, the painful financial and economic upheaval of the past three years can be traced to unbridled complexity outrunning the ability of both