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Question. Is it remotely possible that as Danish financial institutions attempt to simultaneously increase their capital reserves, that will suck enough money

• venantius 8y ago
  It's possible but pretty unlikely. The capital buffers being introduced are about 1% of Danish banks' balance sheets, and it's likely that the capital buffer for this was previously non-zero (e.g. likely 0.25% or 0.5%). So an increase of 0.5% or 0.75%. And it's worth keeping in mind that a lot of banks, for governance reasons, will already have been holding in excess of the regulatory requirement. So it's not as if most of the banks will have to come up with this money suddenly - it'll already be there and available. That's not to say that it's not a large amount of money in absolute terms, but relatively speaking if they were to reduce their loan origination for the year they have to come up with the money be something like 2-3% they'd be totally fine. That's not exactly going to kill the economy.