An article in the Telegraph (U.K.) this weekend discusses the need to reduce the capital reserve requirements of banks (see http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/15/cnbanking115.xml).  The reserve requirements of a bank dictate or govern the amount of money banks can loan.  It is a "buffer" or reserve of cash to guard against bad loans.  For example, if the … Continue reading Code Red: International Banking Liquidity has serious problems