The point
If you ask me, and if you're reading this I must assume that you are, the notion that regulators are intervening in this way is beyond ridiculous.
Investment firms pay loads of money to the smartest people on the planet to make sure that they are accurately hedging their own risk, and they don't need any sort of extremal committee to tell them what sort of gold they should hold on their balance sheets.
The global financial crisis wasn't caused by paper gold, nor even by banks mismanaging their risk. The banks most likely knew that if they ever got in more trouble than they could handle, the authorities would come and bail them out.
As a result, they were able to take ludicrous risks with other people's money, and when they lost, the banks would not pay a dime, which is exactly what happened.
Future economists will no doubt understand very well that in order to avert crisis, institutions need to be held accountable for the risks they take. Micromanaging said risks without that layer of accountability is nothing short of preposterous.
After all, government officials who tend to create these rules do not pay billions in bonuses for a deep understanding of financial risks, nor could they, even with an endless budget, attempt to comprehend all the intricacies of these organizations' respective balance sheets.
So we can see that these rubber stamp officials are rather content offering gold as an experimental sacrificial lamb.
I wonder if the members of The Basel Committee on Banking Supervision truly understand that by taking this approach, they are giving a free pass to the actual culprits and very likely ensuring that what they seek to prevent will happen again soon.
