This approach would have three significant benefits as compared to the CCyB option: greater simplicity, transparency, and predictability. Raising the fixed floor would be simpler to execute than the CCyB proposal because raising the floor once and for all times would not require the Board to make complex, real-time decisions about how to adapt the regulatory framework to the evolving vulnerabilities to the economy.
If banks had to hold the same percentage of capital against all assets, any institution wanting to maximise its profits would probably invest in high-risk assets, as they produce particularly high returns. This would eradicate the corrective influence of capital cover in reducing risk.