Almost as soon as the standard was set, the argument over its definition, implementation and consequences began. If the 8 percent rule had been imposed as a simple percentage, the effect would have been to encourage banks to make the most high-risk investments available in a frantic attempt to milk every cent of profit from every dollar of capital. It would have incentivized risk taking. So the Basel Committee provided for a basic system of risk weights, requiring no capital to be held against the low-risk, short-term debt of governments that were members of the OECD, the exclusive club of
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