On Risk

The last three paragraphs are best and here is the money quote

The capacity for risk is related to the maturity of funding and not what an institution is called.

(h/t Arnold Kling, who comments)

My view is that the fundamental risks, such as business cycle risk, interest-rate risk, currency risk, and so on, are inescapable. However, regulatory incentives affect both the aggregate exposure and the concentration of exposure.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.