Written evidence to be reported to the House
Banking Bill
4:40 pm
Jonathan Taylor: Yes, that is exactly right. The way in which it would work is that unless you can net off your position for credit risk purposes, your regulator will make you account, on a gross basis, for your capital, against the credit risk, which you take on by being the counterparty of a firm that is based here. That would greatly increase your capital requirement. The result, I am sure, would be that there would be a great deal less business.