It’s important for the world financial system that the uncertainty around the future scheme of regulation be resolved quickly. That means in the next few weeks or months.
The debate about appropriate capital levels and accounting rules for the banks, and over which bodies should regulate and supervise them and how, both individually and as a system, has been all over the place.
Much more crucial aspects remain to be settled than setting caps on bankers’ pay. Private suppliers of capital to the banking system will insist on an economic return that, even if lower than in the past, must be less volatile and more dependable. If investors are not able to see this governments will remain large holders...
