No cure through the cycle
Some have argued that the antidote for pro-cyclicality in the Basel II capital requirements is theuse of ‘through-the-cycle’ estimates of default and recovery rates. David Rowe argues that, whilethis might mitigate the pro-cyclical impact of the Accord, it would also introduce unacceptablevagueness into the estimates and seriously undermine the basis for back-testing and verification
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