At sufficiently high levels, however, banks’ increased “skin in the game” may reduce the profitability of risk-shifting strategies, restoring the positive effect of capital regulation on financial stability and welfare.
In a fable “The butcher and the dog” Dositej Obradovic makes a reference to an old Serbian saying: “Do me a favour – cheat me early in the game”. I think that the latest incidence of “cooling off” of the Belex 15 and Belex line indices has had a positive effect.