So first of all, I am glad that we still have a risk-sensitive capital framework, although restricted by important backstops. I am convinced that risk sensitivity is the only way to give banks effective incentives. Bigger risks need to be accompanied by higher capital buffers. Lower risks need smaller capital buffers.
If we were to de-link capital requirements from risks and, therefore, potential losses, we would have to deal with unhealthy consequences. In a crisis there would not be sufficient capital to cover increasing risks and losses, as we would incentivise weak banks to take on high risks in pursuit of high returns.