Regulators Want Banks to Rescue Themselves Next Time

“I suppose we should talk about the Financial Stability Board’s new global anti-too-big-to-fail proposal? … The point is not just to have well-capitalized banks. It’s to know what would happen if a bank runs into trouble.”

A bank is a collection of probabilities. You can estimate how much its assets are worth. But the assets may be worth much more, or much less, than you think

This is basically how capital regulation works


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