102
Parliament’s special session on Credit Suisse is taking place this week. One of the most frequently asked demands is for higher equity ratios for the banks. But would more equity have saved Credit Suisse? The hope is based on a simple formula: Higher equity equals more stable banks! But it’s not that clear. In the Geldcast update we clarify the questions: Why are banks unstable at all? What happened at Credit Suisse in your last few days? Would it have survived with higher equity? Or are there better regulatory approaches? In the Geldcast Update we also clarify what the difference is between weighted equity and unweighted equity. And we’re talking about Common Equity Tier 1 (CET1) and Additional Tier 1 (AT1) capital.