IMF authors argue tougher capital rules could work

09 Feb 2012

Two authors of an IMF Working Paper published Wednesday said that higher bank capital requirements could have modest effects on the world economy — provided central banks could alter monetary policy at the same time.

Without changes in monetary policy, they estimate a 0.5 percentage point reduction in peak GDP for a 1 percentage point increase in bank capital requirements.

An extra 1 percentage point just for the 30 most systemically important banks (dubbed GSIBs in this study) would mean a reduction of ...

Already a subscriber?

Continue reading this article

Try full access to GlobalCapital

Free trial