Regulators pine for the simple life


The contest between risk-based capital and the leverage ratio pits complexity against simplicity, with all the pros and cons that usually define that contest: things that are simple can be easily understood and compared, but those advantages may not be worth much if they communicate something wrong or misleading. 

It’s the job of the Basel Committee on Banking Supervision to strike the right balance in the prudential framework – and the committee admitted in a July discussion paper that the

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