Not worth the insurance premium

croaking cassandra

At lunchtime I went to hear Reserve Bank Deputy Governor Geoff Bascand make the case for his boss’s proposal to require the locally incorporated banks operating in New Zealand to fund a much larger proportion of their balance sheets with equity capital.  I will write tomorrow about a range of other points that were, and weren’t, made.  But for now I wanted to pick up just one number he used in making the case.

In the course of his presentation, Bascand used a slide which reported the Bank’s view that these changes in capital requirements will lower the long-run level of GDP by a bit less than 0.3 per cent.  I hadn’t seen the number before (maybe it was in the documents, in which case I missed it), but what struck me was Bascand’s suggestion that this is “not a very big number”.

Looked at quickly, perhaps that is true. …

View original post 1,099 more words

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This entry was posted in applied price theory on by .

About Jim Rose

Utopia - you are standing in it promotes a classical liberal view of the world and champion the mass flourishing of humanity through capitalism and the rule of law. The origin of the blog is explained in the first blog post at https://utopiayouarestandinginit.wordpress.com/2014/03/12/why-call-my-blog-utopia-you-are-standing-in-it/

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