There are not many ways in which internal models are like sports cars, but plans to impose a floor on modelled capital numbers has brought some parallels to light. In effect, the floor is like a speed limit – a bank can drive as slowly as it likes, but if its models suggest it can safely put its foot down, the limit takes effect. And if that limit is too low, of course, a bank may as well trade in the sports car for something that requires less maintenance.
Sports car owners hate the idea. "Gen
The week on Risk.net, March 10-16 2018Receive this by email