Generally, economic models of capital are tied to unexpected losses. The assumption is that expected losses in the ordinary course of business should be covered by normal operating earnings. For losses beyond the normal range of expectations, sufficient capital should be in place to absorb the loss and leave the financial institution stable and able to continue operating effectively.
As President of the European Central Bank, it is an honour to speak in a nation that has done so much to promote and further the cause of European integration. It was exactly 300 years ago, in 1713, that the Abbé de Saint-Pierre presented his Project for Perpetual Peace, one of the first visions for a union between European nations.