The financial crisis of 2008, like the pandemic Spanish flu 90 years prior, spanned the globe twice and caused substantial destruction. It also introduced an entirely new lexicon of economic and regulatory terminology, such as “contagion” and “systemic shock,” into the popular and...

The paper discusses the reform of capital regulation of banks in the wake of the financial crisis of 2007/2009. Whereas the Basel Committee on Banking Supervision seems to go for marginal changes here and there, the paper calls for a thorough overhaul, moving away from risk calibration and...