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Understanding bank capital: a primer

February 13, 2018

Includes "In this primer, we explain the nature of bank capital, highlighting its role as a form of self-insurance providing both a buffer against unforeseen losses and an incentive to manage risk-taking. ... We do not know the optimal capital ratio for banks. But, in contrast with the Treasury (and with Jamie Dimon), we believe that current capital requirements are not high enough."

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