Absent such arbitrage, a regulatory capital requirement that is inappropriately high for the economic risk of a particular activity, could cause a bank to exit that relatively low-risk business, by preventing the bank from earning an acceptable rate of return on its capital.
Executive Management Department  An address by Lesetja Kganyago, Governor of the South African Reserve Bank, at the launch of the MPC Schools Challenge, Pretoria 21 July 2017  Good morning ladies and gentlemen  Decisions whether to cut, increase, or keep interest rates unchanged are of enormous importance to the economy general, and they affect most people, either directly or indirectly.