Banks are hoarding all the cash they can (avoiding new deals, not renewing facilities that come to an end and would in normal times be extended, and now even trying to find legal - if not necessarily very proper - ways to sneak out of existing commitments), both because they need it for their own basic needs, and because they simply don't trust the risk represented by other banks.
This is partly why the Central Banks have been trading Sovereign debt for crappy collateral: it helps relieve the regulatory caputal pressure on the banks. But they should be not just swapping assets but creating more money. (I know, I know, inflation - but is it inflation or anti-deflation in this case? No credit -> no money, in the fiat money system) A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
Banks were rather happy to be upgraded and have lower capital requirements when their balance sheets looked and smelled of fresh roses. The profits that these rules allowed then (and which were cashed in, no questions asked) cannot be forgotten today.
Accountants are standing firm on this right now (the similarly pro-cyclical mark-to-market rules), and they are right. In the long run, we're all dead. John Maynard Keynes
The profits that these rules allowed then (and which were cashed in, no questions asked) cannot be forgotten today.
