This podcast episode delves into the topic of increasing capital requirements for banks in order to prevent financial crises. It discusses the potential risks faced by depositors when banks make risky lending decisions and argues that well-capitalized banks are less likely to default on their debts. The episode explores the aftermath of the 2008 global financial crisis and the efforts to raise capital requirements for banks. It also presents contrasting views on the impact of higher capital requirements, with the Bank Policy Institute claiming it would lead to more expensive loans and a worse economy, while the Bank for International Settlements believes it would reduce the cost of financial crises. The episode concludes by bringing attention to the ongoing debate and potential revisions to the Basel III regulations.
