Banking on capital
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Prudential supervision of banks has increasingly relied on capital requirements. But bank capital played a relatively minor role in predicting bank solvency during the Global Crisis, except for scarcely capitalised banks. This column argues that while capital is a helpful tool to support bank financial stability, it is complex for supervisors to calibrate it precisely. Macroprudential authorities should be able to complement capital-based tools with additional, borrower-based prudential instruments.
| Original language | English |
|---|---|
| Publisher | VOXEU.org |
| Media of output | Online |
| Publication status | Published - 14 Nov 2017 |