Dealing with systemic risk when we measure it badly

While an omniscient regulator would base a bank’s capital requirement upon its contribution to systemic risk, Jon Danielsson shows that a regulator who measures a bank’s contribution to systemic risk badly will find it optimal to use a simple leverage ratio instead.  Jon Danielsson is an economist teaching at the London School of Economics and active in domestic and international policy debates.

Publication

Image courtesy of interviewee. February 24, 2019

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