Cecchetti in Schoenholtz, ugledna profesorja financ in avtorja učbenika “Money, Banking, and Financial Markets“, sta zelo skeptična do še ene izmed inovacij v zadnjem paketu bančnih pravil, imenovanih Basel III, in sicer do tega, da bi lahko banke uporabljale prilagodljive kapitalske blažilce. Preprosto rečeno,v času kreditne rasti bi morale banke oblikovati večje kapitalske rezerve, v času recesij pa bi lahko imele manjše kapitalske rezerve in tako avtonomno sprostile kreditne pogoje tudi brez zniževanja obrestnih mer.

Cecchetti in Schoenholtz pravita, da tak sistem ne more dobro delovati zaradi visokih informacijskih zahtev, dolgih transmisijskih odlogov in precejšnjih političnih odporov. Namesto tega predlagata striktna pravila v smislu visokih kapitalskih zahtev in stalnih stresnih testov.

These technical and political problems create doubts about the time consistency of a discretionary framework. Can policymakers really credibly commit to raising capital requirements when the time comes? If banks doubt the resolve of future policymakers, they have an incentive to take on greater risks today, making the system more (not less) vulnerable.

How can we overcome these regulatory challenges? One answer is to make the financial system sufficiently robust so that it can weather occasional booms and busts. This suggests a combination at all times (good and bad) of high capital requirements and effective stress tests implemented in a rules-based framework.

Capital requirements would always include what in Basel III is called a conservation buffer. In effect, there are two levels of capital that matter, a high level above which a bank’s operations are unrestricted, and a lower one below which the bank would get shut down. In between those two, a bank’s dividend, share buyback and compensation policies would be restricted so that it would retain earnings until it returned to the higher level. You might think of this as an automatic reduction of capital requirements in bad times that avoids the implementation lags of discretionary, time-varying requirements.

Bank stress tests would still be needed to reduce regulatory arbitrage. They also would allow regulators to assess the vulnerability of those financial sectors where asset prices may be out of whack. From this perspective, stress tests include a hidden element of discretion, but the communication and decision-making process (not to mention the politics) would be far more routine. Indeed, because banks know that stress tests are coming, the impact should be smaller if and when the stress focuses on sensitive matters like property lending.

Vir: Cecchetti in Schoenholtz