Narayana Kocherlakota, President of the Federal Reserve Bank of Minneapolis, meanwhile suggested thresholds of 5.5 percent for unemployment and 2.25 percent for the medium-term inflation outlook.
And does it, on the other hand, create rules which are simple enough to decrease model risk? Banks are not enchanted by Basel III. Many of them claim that it throws risk sensitivity overboard and penalises low risk exposures. Are these claims justified? Well, we have not thrown risk sensitivity overboard. And why would we?