Basel capital surcharges are too low – Fed paper
Banks reliant on short-term funding are particularly vulnerable
Global banks need to carry significantly higher capital than the Basel III standards currently require if they are to survive a serious crisis without taxpayer support, according to two economists at the Federal Reserve.
In a working paper published in February, Wayne Passmore and Alexander von Hafften, warn the surcharges for global systemically important banks (G-Sibs) "are too small based on the experience of the 2007–09 financial crisis".
They estimate regulators would need to raise capital
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