Youthink! The World Bank's blog for youth
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Submitted by Per Kurowski on

“The World Bank is the largest single source of development knowledge”

Absolutely, but that does not mean it will be right all the time. For instance it has not protested the risk-weighted capital requirements for banks which go against any developing principle.

Allowing banks to earn much higher risk-adjusted returns on equity on assets perceived as “safe”, than on assets perceived as “risky”… introduces a distortion that makes it impossible for banks to fulfill their societal duty of allocating bank credit efficiently in the real economy.