Remarks hosted by the Institute of Regulation & Risk North Asia, Hong Kong

Remarks hosted by the Institute of Regulation & Risk North Asia, Tokyo, Japan.

The paper derives optimal capital requirements, when the bank’s quality is private information. The supervisor can inspect the bank and punish the undercapitalized one with recapitalization and downsizing. The cost of bank’s capital and its ability to sell its assets are crucial for the...

Based on remarks at the Group of 30 plenary meeting, Bern, Switzerland.