Oireachtas Joint and Select Committees
Thursday, 5 February 2015
Committee of Inquiry into the Banking Crisis
Context Phase
Mr. Mario Nava:
One way of doing that is by increasing the capital requirements for the various activities. When the capital requirements are low, it may well be that the risk is not priced sufficiently. If we increase the capital requirement we may not get the exact risk pricing, but we certainly set a floor for risk pricing so that it is not too low.
There is one point I should make very clear. As the Senator knows, the objective here is not to eliminate risk because lesson No. 1 in economics is "no risk, no return". The objective is not at all to eliminate risk but to allow people to take risks in such a way that if something goes wrong they pay for it. They can take a risk but they assume the risk. The aim is to avoid people taking risks and then shovelling that risk onto someone else. That is the objective.
No comments