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A very strange way to assess the safety of banks

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Global regulators have a peculiar way of assessing the soundness of big banks: Ask bankers how risky their investments are, then figure out if they have enough capital to absorb the potential losses.

This method, known as risk weighting, has failed repeatedly - most spectacularly during the 2008 financial crisis. The good news is that some smart regulators understand and are articulating the problem.

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