Wednesday, August 5, 2015

A shipping disaster’s lessons for Dodd-Frank

Randall Kroszner in the Financial times on 30th July 2015 has in a very simple and common sensical way argued about the limitations of  regulating the Banking Sector of an economy.
He compares the prudential requirements on banks to the requirement of keeping life boats on the deck of ship. 
Randall argues that life boats add to the weight on the ship and as these are kept on the deck of the ship it makes ship top heavy. And thus the ship is more prone to overturning. The same is true about the regulations  on banks.
An overall interesting read.

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Vasant Vihar, New Delhi, India
A Central Banker with 22+ years of experience. Interested in latest developments in Indian Economy and Banking. Certified Trainer with 5+ years of experience in classroom training. VIEWS EXPRESSED ARE PURELY PERSONAL