Banking Risks Spur Talk of 20% Buffers in Sweden

Sweden’s economic elite are debating whether governments with oversized bank industries need to demand even tougher capital standards than those agreed after the latest wave of regulatory tightening.

Sweden’s requirement that its four biggest banks hold at least 10 percent in core Tier 1 capital of risk-weighted assets this year, and a minimum of 12 percent from 2015, marks one of Europe’s most stringent regulatory overhauls. Yet some of the nation’s most influential economists now argue those rules may be too weak to protect the economy from losses.