Ii Case
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European Banks, by Arnold Kling (Econlog)
Hyun Song Shin writes,
>
The permissive bank risk management practices epitomized in the Basel II
proposals were already widely practised within Europe as banks became more
adept at circumventing the spirit of the initial 1988 Basel I Accord. Basel II
was subsequently codified most thoroughly in the European Union through the
EU's Capital Adequacy Directive (CAD). In contrast, US regulators have been
more ambivalent toward Basel II, and chose to maintain relatively more
stringent regulations (at least, in the formal regulated banking sector) such
as the cap on bank leverage.
As I read it, the upshot of this paper is to draw attention to Europe as the
locus of the Minsky/Kindleberger euphoria.* Shin suggests that the creation of
the euro in 1999 is what kicked off the huge expansion in the balance sheets
of European banks.
*Tyler Cowen prefers to call this Austro-Austrian.
A lot of economists would say that you cannot shrink those balance sheets
without causing horrible macro effects. That view, in turn, would justify a
bailout. I am a holdout against that view.
Tyler Cowen cited the paper, which had been first cited by Paul Krugman. In
this case, all of us agree about the ...
Wii in Black (ii case installation)




































































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