But for any firm with less than average systematic risk and less than average leverage, the cost of equity would be lower; and at zero leverage, much lower, perhaps as low as say 6 percent. At that rate, even an all-equity bank with an expected return on assets of only 8 percent would not only be viable, but would presumably sell for a 1.3 premium over book value..... An essential message of the M & M Propositions as applied to banking, in sum is that you cannot hope to lever up a sow's ear into a silk purse. You may think you can during the good times; but you'll give it all back and more when the bad times roll around...... I can't  BIS Review 133/2010  11  who says “equity capital is very expensive to a bank” appears not to understand this. It might be fine for most people not to understand this – just as it is fine that most people do not understand what tensile strength materials need to have to be suitable to build a bridge with. But it is not fine if those that run banks, or regulate them, don’t understand it, any more than if engineers who design bridges don’t know about the strengths of building materials. In retrospect I believe a huge mistake was made in letting banks come to hold much less equity capital – relative to un-weighted assets – than was normal in earlier times.
Entering the EU, for the NBRM would automatically mean participation in the European System of Central Banks (ESCB). In this manner, we are getting much closer to Europe in the field of central banking. The staff of the central bank becomes part of many committees, subcommittees and working groups of the ESCB, which is crucial ingredient for strengthening the institutional capacity for policy making. And this is vital for the future steps, as the EU membership, for small and open economy, with high level of euroization and fixed exchange rates would inevitable imply need for very serious preparations for the Euro adoption. It requires passing the so-called test period, staying in the ERM 2 mechanism for at least two years and delivering stable currency, inflation and long term interest rates comparable with those in the EU, and disciplined and prudent public finance. All of these are Euro convergence criteria that at the end boil down to having safe and sound economy and disciplined monetary and fiscal policy, as a precondition for smooth monetary integration. Hence, entering the EU not only will facilitate trade and finance, and make movement of people much easier, but it will also open the doors to gradually move towards a single currency. The benefits of adopting the Euro are well known, in particular for a country that already has the exchange rate as a target, which means smoother transition. The single currency eliminates the currency risk and transaction costs, and thus facilities trade of good and services.