Is 8% for all seasons?

Risk analysis

In recent months, this column has considered how introducing greater risk sensitivity into the Basel capital Accord could accentuate the business cycle. Michael Gordy, senior economist at the US Federal Reserve Board, has argued that, in practice, required capital will be smoothed over the business cycle, since the consequences of not doing so are simply too severe. He sensibly maintains that the issue is how to do this with the least damage to the alignment of regulatory and economic