Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Some level of the financial crisis can be laid into the Basel agreements that wrote ratings agencies into the process - i.e. AAA is safe for pension funds, etc.

This is because the Basel accords are a product of the (evolving) financial conventional wisdom of the last 20 years. According to Neoclassical Economics, ratings agencies make a lot of sense!

This ECB rule is the same mistake writ large.

But this is an ECB internal rule, right? Not a consequence of the treaties. What A central bank will accept as collateral at the discount window is entirely up to that central bank, and in fact that choice is a key instrument of both banking regulation and monetary policy.

Of course, this assumes the ECB is not blindly following Monetarist dogma... Oh, wait!

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Thu Mar 25th, 2010 at 07:02:52 AM EST
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