This is something for European and German legislators to decide. The European Commission and the German Federal Government give BaFin and the Bundesbank an opportunity to inform their thinking, and we encourage them to stick to the standards. I am a fervent supporter of Basel-compliant and risk-sensitive implementation of the reform package finalising Basel III.
Second, the output and employment losses and other social and economic costs associated with the aftermath of the GFC proved to be much greater and more deep-set than policy makers expected. The‘lean’ view proposes that monetary policy should actively lean against credit booms for financial stability purposes.