The United States is emphasizing higher capital requirements.

Counter cyclical capital requirements fit with this idea, and a range of indicators could be used to calibrate the increase in capital requirements, coupled perhaps with some discretion.

First, capital requirements should be set as a straightforward ratio of common equity to total assets, thereby abandoning all reference to banks own risk management models.

Similarly, banks would have incentives to game capital adequacy requirements by manipulating how capital and assets are defined.

And equity capital requirements for large, systemically important financial institutions remain too low.

Before World War II, venture capital investments (originally known as development capital ) were primarily the domain of wealthy individuals and families.

There seems to be little appetite for proposals to vary capital adequacy requirements counter cyclically.

At the source, capital requirements for currency mismatches in portfolios, together with margin requirements on foreign exchange derivatives, make sense.

There have been some increases in capital requirements but far short of what is needed.

For example, thenet cash flow to total invested capital and WACC are appropriate when valuing a company based on the market value of all invested capital.

All this financial engineering would avoid the obsolete capital requirements that burden banks operation.

Smarter capital requirements better Basel rules aren t the answer.

High capital and provision requirements for certain transactions, or prohibition of such transactions, should also be introduced for prudential reasons.

More importantly, the crisis highlighted the risks associated with high dependence on foreign capital.

Although there is talk about offsetting these risks with macroprudential policies, no such policies exist in the US, except for the increased capital requirements that have been imposed on commercial banks. There are no policies to reduce risks in shadow banks, insurance companies, or mutual funds.

The best known tools for this are margin requirements and minimum capital requirements.

Capital controls, whatever their benefits in terms of mitigating the risks associated with volatile capital flows, are costly in a variety of ways.

It also agreed that on a temporary basis the necessary funds should be borrowed from the Working Capital Fund.

In the Basel III negotiations that concluded last year, the French and Germans strongly favored relatively low capital requirements.

For instance, we know that the global capital adequacy requirements produced by the Basel Committee reflect overwhelmingly the influence of large banks.

This put financial capital in a privileged position governments had to pay more attention to the requirements of international capital than to the aspirations of their own people.

There seems to be little appetite for proposals to vary capital adequacy requirements counter cyclically. This would enable capital buffers to be created in good years, which could then be drawn down in bad years.

The banks claim that higher capital requirements and other regulations will drive up the cost of credit.

The capital requirements attached to that subsidiary would be more burdensome, with minimum Tier One capital set at 10 , compared to the new Basel 3 standard of 7 .

Alternatively, the method can be used to value the company based on the value of total invested capital.

Since high risk premiums on government bonds endanger the capital adequacy of banks, half a solution is not enough.

Furthermore, the effect of internationally agreed regulatory reforms most of which have yet to be implemented will be to increase banks capital requirements while shrinking the scale of maturity transformation risks that they can carry on their balance sheets.

A bloated and dysfunctional financial system had misallocated capital and, rather than managing risk, had actually created it.

But Chinese policymakers should also recognize the significant risks inherent in relaxing capital controls.

While the right policies cannot eliminate risk, they can ameliorate the cost benefit tradeoff from capital flows.

No working capital requirements have been included in this budget submission to leave room for other priority expenditure requirements.

As above, firm value is enhanced when, and if, the return on capital exceeds the cost of capital.

The latter course risks the worst of all worlds all of the costs of capital controls and all of the domestic policy complications from volatile capital flows, but few of the potential benefits of foreign capital.

WASHINGTON, DC European leaders are convinced that bank capital is expensive, in the sense that raising capital requirements would slow economic growth.

There are some international agreements, notably the Basel Accords on minimum capital requirements and there is also good cooperation among market regulators.

For example, capital charges should account for the degree of friction and rivalry in the banking sector, with tighter requirements in more competitive contexts.

Instead, the reform proposals have opted for a mixture of higher capital requirements for leading banks and pre funding of deposit insurance by a special levy on banks.

The proposed Basel III regulations set wholly insufficient minimum capital requirements and maintain a failed approach to adjusting the requirements to risk.

Most economists in China seem to support the PBOC s stance, citing the potential benefits of capital account liberalization. But Chinese policymakers should also recognize the significant risks inherent in relaxing capital controls.

Internationally agreed rules stipulate that banks must create capital reserves commensurate to the risks that they take when they invest depositors savings.

But the paper also shows that domestic prudential policies such as capping home mortgage loans at a certain percentage of the property s value, or increasing banks capital requirements during economic upswings can be effective at restraining lending booms.

Brazil has been aggressive in terms of capital restrictions, twice increasing its tax on financial inflows.

But, when it comes to upping equity requirements against risk weighted assets, who is to do the weighting, and according to what methodology?

The rejected proposals are thus good policy money market funds should be made safer via capital requirements and liquidity restrictions because they already receive a de facto government guarantee.

Over time, however, the interest rate premium is likely to be small, because higher capital requirements and contingent capital should significantly reduce the likelihood of ever reaching the triggers.