Like many such unwarranted controls on economic life, high black-market premiums also breed corruption, with all its negative effects, because they create strong incentives to bribe officials or to smuggle goods to avoid paying the black-market-premium tax.
It’s the job of chief risk officers, the CROs, to constantly remind decision-makers about the “fire safety rules”. The recent financial crisis showed how important that job is. It’s a job that requires CROs to be steadfast and to speak unpleasant truths from time to time – just like banking supervisors have to do. It’s regulation that helps us to do our job.