Having spent nearly a decade crafting new capital requirements to bolster the resilience of the country’s largest banks, the US Federal Reserve is getting ready to do some fine-tuning. The rules can certainly be improved — but what’s needed is more than tinkering around the edges. The Fed has two main tools to ensure banks have enough equity capital, the ...

I once congratulated Mario Draghi on his performance as president of the European Central Bank (ECB), telling him he had made only one mistake. “What’s that?” came the instant question. “Taking the job,” I replied. My point was that by the time Draghi was appointed, the ECB could no longer hope to be a conventional central bank, if indeed it ...

The field of weather forecasting holds a lesson that economists might do well to heed: Stop being so sure of yourself. The reputation of the economics profession suffered after the 2008 financial crisis, in large part because its practitioners were so overconfident. They have since been working to forge more realistic models of the economy, and re-examining some of their ...