One of Britain's most influential architects of banking reform resumed a spat with the Bank of England on Wednesday, arguing that policymakers have gone too easy on the size of mandatory buffers aimed at protecting balance sheets in times of stress. The Independent Commission on Banking (ICB) chaired by John Vickers has recommended a systemic risk buffer for banks equivalent to 3 percent of risk-weighted assets, while the Bank of England says the level should be 1.3 percent.
"The Bank's analysis for the right levels of capital assumes average risk conditions, which is not the right assumption. It's like testing flood defences by assuming the weather is average," Vickers told reporters, responding to a 13-page letter to Parliament in April from BoE governor Mark Carney which said banks were, in general, adequately capitalised.