Once we understand them better, and they grow to a material size, we can do a deeper analysis on how they should be regulated. Similarly, we have been allowing more and more participation in derivative markets by what are typically known as speculators – those without an underlying risk they are hedging. Speculators are much maligned in India and often confused with market manipulators.
For a group of 13 major German banks with an international focus, the tier 1 capital ratio under the currently applicable Basel II rules rose from 8.1% to 13.1% (see Chart 6 for the sources of capital formation). Leverage – measured as total assets to tier 1 capital – dropped from 43 to 33.