Higher capital levels could help economy, FSA says

Raising minimum bank capital and liquidity levels could help the economy grow faster, according to a UK Financial Services Authority (FSA) discussion paper published yesterday.

The FSA's model predicts that minimum capital and liquidity standards could be increased by six percentage points each before they start to harm economic growth. While higher capital levels would reduce banks' ability to lend, this would be balanced by the benefits of a more stable banking system which would be less prone

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