3  -9which it could be further boosted by the additional fiscal programs currently under discussion. If those dynamics should lead this “transitory” inflation to continue too long, it could affect the planning of households and businesses and unanchor their inflation expectations. This could spark a wage-price spiral that would not settle down even when the logistical bottlenecks and supply chain kinks have eased.
Basel III has increased considerably the demands for both: the quantity and the quality of bank capital. But will that be enough? Second, the capital rules that are binding as of today are risk-weighted. As a general rule, this makes sense: otherwise, banks have an incentive to invest in the riskiest assets.