Regulation may be exacerbating contagion risks by encouraging banks to employ similar risk management techniques, witnesses told the UK's Treasury Select Committee today.

In a rare moment of approximate agreement, Kevin Dowd, a professor of economics at Durham University, and Thomas Huertas, a partner at Ernst and Young, warned of the unintended consequences of using risk-weighted assets to set capital requirements.

"Better managed banks will tend to preserve an independent and separate risk