Regulations requiring banks deemed systemically important to hold more capital may backfire, according to Frederic Oudea, ceo of Société Générale. Oudea, who is also chairman of the Institute of International Finance’s steering committee on regulatory capital, said in a statement that designating banks as important runs the risk of creating “pressures for concentration and hence intensify the problem of ‘too big to fail’ rather than eliminating it.” He added that imposing hire capital requirements could constrain lending and force those institutions to hold too much sovereign debt.
