from Greenberg Center for Geoeconomic Studies

Reforming Capital Requirements for Financial Institutions

April 01, 2009

Report

More on:

Financial Markets

Inequality

Overview

This Working Paper, the second in a series from the Squam Lake Working Group distributed by the Center for Geoeconomic Studies, argues that regulators consider systemic effects when setting bank capital requirements. Everything else the same, capital requirements should be proportionately higher for larger banks, banks that hold more illiquid assets, and banks that finance more of their operations with short-term debt. But capital requirements are not free. When designing capital requirements that address systemic concerns, regulators must weigh the costs such requirements impose on banks during good times against the benefit of having more capital in the financial system when a crisis strikes.

More on:

Financial Markets

Inequality

Explore More on CFR

Germany

President Trump has targeted Germany over its supposed dependence on Russian natural gas, and the proposed Nord Stream 2 is dividing the EU. What’s in store for Europe’s pipeline politics?

Disasters

The U.S. government responds to scores of disasters each year, coordinating closely with state, local, and foreign partners. However, more frequent and severe storms, fires, and floods are straining resources.

Saudi Arabia

If Tesla goes private with significant funding from Saudi Arabia or other foreign investors, it would raise national security and ethical questions.