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One approach to implementing more effective capital requirements is to require financial institutions to match the amount of capital they have to the business cycle:
One approach to implementing more effective capital requirements is to require financial institutions to match the amount of capital they have to the business cycle: that is, forcing FIs to have proportionally more capital when markets are rising and less when they are in decline. What problem is this suggested regulation meant to address and how would it improve upon the current system?
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