What was different about the regulatory approach developed in the 1980s is that it was founded on international agreement, and it focused on the concept of capital as a cushion against risk. The Basle Committee on Banking Supervision had been created in 1974, with the initial task of identifying which country’s supervisors should be responsible for the activities and soundness of internationally active banks.
The economists at the Bundesbank contributed by providing the task force with two simulations to identify the counterfactual situation. Both use a state-of-the-art DSGE model7. As you know, the first step in applying such a model is to think about why asset purchases should affect prices at all.