Monday, May 07, 2012

International holding of bonds and capital

International holding of government bonds.

Bank adequacy: weight and see - "But what would be the effect of removing the zero weighting on banks’ domestic sovereign debt holdings? In its latest stability report, the IMF takes a stab at estimating the “correct” risk weightings to use, via default rates embedded in sovereign credit default swap spreads. Doing this lowers the average capital adequacy ratios across banks in emerging countries by 2-3 percentage points – no small sum. Ratios for European banks fall by less, between 0.5-2 percentage points. The reduction for US lenders is smaller still. Even so, more capital would be needed."

'via Blog this'

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