BofA CEO: Higher Capital Requirements Will Curb Lending

The video discusses the implications of increased capital requirements on banks' ability to lend. It covers the Basel standards, stress tests, and how these regulations impact capital ratios. The discussion highlights that higher capital ratios can limit lending capacity, as banks must maintain riskless capital, often resulting in unproductive cash reserves or treasury securities.

What are the potential risks associated with holding capital in cash or treasury securities?

In what ways does an increase in capital impact lending practices?