BoE's Tucker Says Banks Should Not Be Allowed To Determine Own Capital Needs

BoE's Tucker Says Banks Should Not Be Allowed To Determine Own Capital Needs


There should be prudential regulation to cap banks' leverages and to maintain them properly capitalized, Bank of England deputy governor Paul Tucker said Wednesday.
Policymakers need to be confident that the risk-weights are determined robustly, he said at the annual meeting of British Bankers' Association.
Leaving banks to freely choose their risk-weights, using internal models is not safe and will hardly fits with society's purpose in regulating banking in the first place.
He observed that the new Basel package is an attempt to use simple measures to put bounds on the consequences of flaws in more complex measures. According to Tucker, more will need to be done in the years ahead to simplify and underpin the Basel regime.