Have the regulatory authorities done enough?

The critical academic literature on capital adequacy requirements (CARs) has mostly focussed on whether these required ratios are high enough, see for example Miles, et al. (2012) and Admati and Hellwig (2013); in recent years this has been accompanied by discussion of whether bail-inable bonds and co-cos (contingent convertible bonds) can act in some part as substitutes for equity within TLAC (total loss absorbing capital) and its close cousin MREL (minimum requirement for own funds and eligible liabilities). Partly because so much careful attention has already been given to this issue, not least in the associated Chapter by Prof. Schnabel, with whom I shared the conference session on this subject, I shall herewith bypass these issues. Instead, I would discuss four wider matters relating to the work of the Basel Committee on Banking Supervision (BCBS). I shall argue that there are several facets of regulation to which the authorities have not given sufficient attention.