Fed paper reignites debate on bank capital ratios
US industry association criticises official analysis suggesting optimal Basel ratios of up to 26%
A US industry association has reacted strongly to a working paper from the Federal Reserve suggesting optimal Tier 1 capital levels for the banking sector of between 13% and 26% of risk-weighted assets.
“The question on the optimal level of capital in the banking system needs to take into account the post-crisis reforms, which have generally been left out of the Fed analysis,” says Francisco Covas, senior vice-president and deputy head of research at The Clearing House Association, which
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