bold thinking from a guy who knows a thing or two. change to the establishment being proposed by the establishment.

"Current supervisory tools were designed to restrain banks from overextending themselves. Right now, we have the opposite problem: banks are not filling the void left by the retreat of market-based finance.

Banks should be part of the solution, not part of the problem. Now is the time to draw on the accumulated balance sheet buffers that were built while the sun was shining. To boost lending capacity further, we need a global freeze on bank dividends and share buybacks.

However, this first step may not be enough, as lenders pull in their horns and retreat from risk-taking. That’s why there needs to be a second step of enlisting the banks to lend, using central bank funding for lending schemes. Risk sharing by governments through guarantee schemes is needed to ensure that economic risks are not pushed to banks or the central bank.

A crisis in market finance needs market-based solutions. For central bank liquidity to reach the far corners of the financial system, it must directly target individuals and businesses that need it most. Otherwise, central bank actions may be just pushing on a string."