The search for optimal bank regulatory capital requirements has received additional momentum recently with the proposal by the Basel Committee on Banking Supervision for reforming its standards. The U.S. Shadow Financial Regulatory Committee has developed a comprehensive program for capital standards for large banks. The committee’s plan would increase...

Banks are among the most heavily regulated institutions in today’s economy. Bank regulation, which seems both normal and immutable, is based on historical antecedents and current policy. The original advantages of a bank charter, such as insulation from competition and a role in the issuance of currency, have been eliminated...

There needs to be a more refined system of risk weights and the use of ratings by private credit-rating agencies to assign risk weights to classes of assets or activities.