Ah, here is a fresh idea from Charles Goodhart and Avinash Persaud  in the FT: give bank supervisors hefty bonuses that pay out over five years or so if the firms in their purview stay profitable.

Next on their menu is a revision to Basel II capital adequacy requirements that raises them by a ratio linked to the growth of the value of bank assets, bank by bank.

“Focusing on value will help lessen the procyclicality of fair value, mark-to-market accounting and value-at-risk models.”

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