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anks to hold more capital, <strong>the</strong> flow of lending would slow and <strong>the</strong> fuel for speculation would diminish.<br />

Such a policy would not eliminate financial crises or recessions altoge<strong>the</strong>r. But as Mr Smi<strong>the</strong>rs rightly<br />

says, <strong>the</strong> aim of central banks should not be to avoid an occasional mild recession but a big downturn,<br />

such as <strong>the</strong> world has been suffering.<br />

Copyright © 2009 The Economist Newspaper and The Economist Group. All rights reserved.<br />

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