It may sound geeky stuff but the current debate around the usability of banks' capital buffer is maybe one of the most important macro debate currently- with very concrete and far reaching consequences
It's not a coincidence that recently the BoE, the ECB, the BIS, all the big shots have written extensively about it. It's also a fascinating debate about central planning vs. individual behaviours, collective vs. individual targets, the role (or absence of) of risk in econ models
Credibility of a central bank on non monetary policy matters, etc.
Really if you have time and are interested in macro stuff, have a look at it.
Of course the mainstream view (of CB) is that buffers should be used and banks "forced" to lend - based on toy models
Really if you have time and are interested in macro stuff, have a look at it.
Of course the mainstream view (of CB) is that buffers should be used and banks "forced" to lend - based on toy models
But I suspect those models view a zero dividend policy forever as the optimal outcome for bank capital so you should take them with a full barrel of salt!
Anyway, this debate will have extremely practical consequences for investors - probably next November - so stay tuned !
Anyway, this debate will have extremely practical consequences for investors - probably next November - so stay tuned !
And always remember rule 101 of markets macro: no one gives a s*** what's right or wrong, all you should care about is what the central banks believe !
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