Basel Committee sovereign debt plans criticised
Basel Committee’s proposal to increase bank liquidity through sovereign bonds could hinder efforts to meet capital ratio targets, conference hears
Attempts by regulators to increase banks' liquidity buffers were likened to a dog biting its tail by Pietro Penza, a PricewaterhouseCoopers (PwC) partner. Speaking at Risk's Asset Liability Management conference in London yesterday, Penza argued that, because of widespread concerns over sovereign debt, encouraging banks to raise their liquidity ratios by stocking up on government bonds would scare off equity investors and limit the growth of capital reserves.
He said: "Rising sovereign yields
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