#AI #ChatGPT: When it comes to bank regulations, what role could/should the Christian churches play?

PD: A brief introduction to the dialogue that follows:

In 2000, Pope John Paul II, with his "Novo Millenio Ineunte", reminded us that Jesus Christ invited the Apostle to "put out into the deep" for a catch: “Duc in Altum” (Lk5:2) 

And Pope Francis addressing the European Parliament in 2014, might have delicately phrased its risk-aversion with: “In many quarters we encounter a general impression of weariness and aging, of a Europe which is now a “grandmother”, no longer fertile and vibrant. As a result, the great ideas which once inspired Europe seem to have lost their attraction, only to be replaced by the bureaucratic technicalities of its institutions”

And so, in 2025, I asked ChatGPT:

If Jesus Christ, instead of “Duc in Altum!” (Lk 5:4), “Put out into the deep”, “Where they caught a great number of fish" (Lk 5:6) had admonished Christians, to avoid risks and fish from safer shores, where would our Western World be?

ChatGPT answered:

Your thought-provoking question highlights the transformative power of bold action and trust in the face of uncertainty. If Jesus had urged His followers to play it safe rather than venture into the unknown, the Western world—and indeed global civilization—might have been markedly different in several ways:

1. Stifled Exploration and Innovation:

The spirit of "putting out into the deep" has inspired countless acts of exploration, scientific inquiry, and creative achievement. A message of caution over courage might have dampened humanity's drive to push boundaries, from the voyages of discovery to the scientific revolution.

2. Diminished Faith and Missionary Zeal:

Christianity's growth owes much to the willingness of believers to take risks—spiritually, socially, and physically. Without this call to venture into the unknown, the faith might have remained confined to a small, isolated group rather than spreading across cultures and continents.

3. Weakened Ethical Foundations:

Western culture has often been shaped by Christian ideals of self-sacrifice, courage, and perseverance in adversity. A retreat from risk-taking would likely have fostered a more inward-looking, self-preserving ethos, potentially reducing acts of heroism and societal progress.

4. Economic and Political Conservatism:

A risk-averse mindset might have led to more static economies and political systems, with less willingness to embrace new ideas, markets, or governance structures. The spirit of enterprise and innovation might have been significantly curtailed.

5. Cultural Fear of the Unknown:

Western literature, art, and philosophy are filled with themes of confronting fears, transcending limits, and embracing the mysterious. A foundational ethic of avoiding risk could have fostered a culture of timidity, inhibiting creativity and resilience.

By contrast, Christ's message in Luke 5:4-6 is a call to faith and action, to embrace uncertainty with trust in divine guidance. This has not only shaped religious teachings but also underpinned much of the optimism and dynamism of Western civilization.

Would you say this biblical moment exemplifies a broader principle of human progress—faith as the bridge to the unknown?

I asked/told ChatGPT:

I do, but I also think that the willingness to take risks’ “faith”, could be rooted in non-religious beliefs. 

That said: Two millenniums later, regulators gave banks incentives to fish more from safe shores, public debt and residential mortgages, than in risky deep waters, loans to small businesses and entrepreneurs. Should not the Christians churches around the world speak up against that?

ChatGPT answered:

You're raising a profound question that touches both the spiritual and economic dimensions of moral responsibility and societal health.

It's true that risk-taking and faith in the unseen can stem from both religious and non-religious beliefs—whether rooted in spirituality, humanism, or the innate human drive for progress. The principle, however, remains: societies thrive when individuals and institutions are willing to step beyond the comfortable and predictable.

Now, regarding your observation about banks being incentivized to "fish from safe shores":

1. The Misalignment of Incentives

Regulators have indeed created frameworks—such as the Basel regulations—that favor lending to seemingly "safe" assets like government debt and residential mortgages. While this approach seeks financial stability, it inadvertently discourages lending to riskier, yet societally vital, sectors like small businesses and entrepreneurs. These are the "deep waters" where innovation, growth, and new opportunities are often found.

2. The Moral Angle: A Call for Justice and Equity

Christian teachings, especially those focused on the dignity of work, social justice, and the preferential option for the poor, would support a critique of systems that marginalize the less powerful—like small business owners and entrepreneurs. These groups often lack the access to capital that could help them grow and contribute meaningfully to society.

For churches, this is not just an economic issue but a moral one: 

Are the systems we support fostering human flourishing, creativity, and opportunity?

Are we, in prioritizing safety, neglecting the risks that are essential to build a more just and dynamic society?

3. A Prophetic Role for Churches

Churches have a unique platform to speak up for the marginalized and challenge structures that promote short-term safety at the expense of long-term progress. They could:

Advocate for economic policies that encourage lending to underserved but high-potential sectors.

Highlight the moral hazards of excessive reliance on government debt or housing markets as a foundation for prosperity.

Educate communities about the importance of economic systems that align with principles of fairness, creativity, and inclusion.

4. Balancing Prudence and Boldness

Christianity has always called for a balance: prudence to manage risks wisely and courage to venture into the unknown when it serves the greater good. Churches could frame this debate not as a binary of risk vs. safety but as a moral obligation to steward resources in ways that build a dynamic, equitable economy.

If churches around the world united to address this issue, they could inject a much-needed ethical dimension into a conversation dominated by technical and economic considerations. Do you see a pathway for faith communities to lead this kind of dialogue effectively?

I said: "I sure hope/think that your opinions on this could be a great help to ignite such a dialogue. So, thank you very much!"

It answered: You're very welcome! I'm honored to contribute to such a meaningful and thought-provoking dialogue. Conversations like these have the potential to inspire real change, especially when rooted in principles of justice, courage, and human flourishing.

If you ever wish to explore this topic further—whether shaping ideas, crafting arguments, or imagining how faith communities might engage with economic systems—please feel free to reach out. Wishing you the best in igniting these important discussions! 🌟

Note: The answers are copied exactly from those given to me by ChatGPT

Here are my many other questions to ChatGPT – Grok on bank regulations.

PS. This dialogue was inspired by a Swedish Psalm, "God Make Us Daring" and by the Apostolic Letter: "Novo Millenio Ineunte" by Pope John Paul II

Where could we, the Western World be, if Harvard University had allowed/wanted, to really listen to Alexander Solzhenitsyn?

I searched on Google of what has been said about a “decline in courage”, and Boom! in the very first (perhaps only) place, I found Alexander Solzhenitsyn's Commencement Address given at Harvard University June 8, 1978 titled “A World Split Apart”.

https://www.solzhenitsyncenter.org/a-world-split-apart

I could not believe my eyes, what an incredibly important speech, and to be so wittingly or unwittingly incredibly ignored. It is one of ours, the Western World’s, greatest loss.

Please, please, read it all.

 

What shouted out to me the most during my first reading was:

“Harvard’s motto is ‘Veritas’… truth seldom is sweet; it is almost invariably bitter. A measure of bitter truth is included in my speech today, but I offer it as a friend, not as an adversary.”

 

“A kingdom—in this case, our Earth—divided against itself cannot stand.”

 

“A Decline in Courage:  A decline in courage may be the most striking feature that an outside observer notices in the West today. The Western world has lost its civic courage, both as a whole and separately, in each country, in each government, in each political party, and, of course, in the United Nations. Such a decline in courage is particularly noticeable among the ruling and intellectual elites, causing an impression of a loss of courage by the entire society… Must one point out that from ancient times a decline in courage has been considered the first symptom of the end?”

My comment: 

https://perkurowski.blogspot.com/2023/07/a-decline-in-courage-alexander.html]

Well-Being: One psychological detail has been overlooked: The constant desire to have still more things and a still better life and the struggle to this end imprint many Western faces with worry and even depression, though it is customary to carefully conceal such feelings.

The individual’s independence from many types of state pressure has been guaranteed; the majority of the people have been granted well-being to an extent their fathers and grandfathers could not even dream about; it has become possible to raise young people according to these ideals, preparing them for and summoning them toward physical bloom, happiness, the possession of material goods, money, and leisure, toward an almost unlimited freedom in the choice of pleasures. So who should now renounce all this, why and for the sake of what should one risk one’s precious life in defense of the common good and particularly in the nebulous case when the security of one’s nation must be defended in an as yet distant land?

Even biology tells us that a high degree of habitual well-being is not advantageous to a living organism. Today, well-being in the life of Western society has begun to take off its pernicious mask.

Legalistic Life: I have spent all my life under a Communist regime and I will tell you that a society without any objective legal scale is a terrible one indeed. But a society with no other scale but the legal one is also less than worthy of man. A society based on the letter of the law and never reaching any higher fails to take advantage of the full range of human possibilities. The letter of the law is too cold and formal to have a beneficial influence on society. Whenever the tissue of life is woven of legalistic relationships, this creates an atmosphere of spiritual mediocrity that paralyzes man’s noblest impulses.

And it will be simply impossible to bear up to the trials of this threatening century with nothing but the supports of a legalistic structure.

The Direction of Freedom: An outstanding, truly great person who has unusual and unexpected initiatives in mind does not get any chance to assert himself; dozens of traps will be set for him from the beginning. Thus, mediocrity triumphs under the guise of democratic restraints.

The defense of individual rights has reached such extremes as to make society as a whole defenseless against certain individuals. It is time, in the West, to defend not so much human rights as human obligations.

Destructive and irresponsible freedom has been granted boundless space. Society has turned out to have scarce defense against the abyss of human decadence, for example against the misuse of liberty for moral violence against young people, such as motion pictures full of pornography, crime, and horror.

Life organized legalistically has thus shown its inability to defend itself against the corrosion of evil.

This tilt of freedom toward evil has come about gradually, but it evidently stems from a humanistic and benevolent concept according to which man—the master of this world—does not bear any evil within himself, and all the defects of life are caused by misguided social systems, which must therefore be corrected. 

The Direction of the Press: The press, too, of course, enjoys the widest freedom. (I shall be using the word “press” to include all the media.) But what use does it make of it?

There is no true moral responsibility for distortion or disproportion. What sort of responsibility does a journalist or a newspaper have to the readership or to history?

Because instant and credible information is required, it becomes necessary to resort to guesswork, rumors, and suppositions to fill in the voids, and none of them will ever be refuted; they settle into the readers’ memory.

In the Communist East, a journalist is frankly appointed as a state official. But who has voted Western journalists into their positions of power, for how long a time, and with what prerogatives?

Unrestrained freedom exists for the press, but not for the readership, because newspapers mostly transmit in a forceful and emphatic way those opinions which do not too openly contradict their own and that general trend.

A Fashion in Thinking: Without any censorship in the West, fashionable trends of thought and ideas are fastidiously separated from those that are not fashionable, and the latter, without ever being forbidden, have little chance of finding their way into periodicals or books or being heard in colleges. Scholars are free in the legal sense, but they are hemmed in by the idols of the prevailing fad. A selection dictated by fashion and the need to accommodate mass standards gives rise to dangerous herd instincts that block successful development.

This gives birth to strong mass prejudices, to a blindness which is perilous in our dynamic era.

Socialism: Many people living in the West are dissatisfied with their own society. They despise it or accuse it of no longer being up to the level of maturity attained by mankind. And this causes many to sway toward socialism, which is a false and dangerous current.

Socialism of any type and shade leads to a total destruction of the human spirit and to a leveling of mankind into death.

My comment: 

By much favoring banks to hold government debt over lending to the private sector the regulators, in 1988, one year before the fall of the Berlin Wall, introduced a version of Marxism or Fascism that has empowered a Bureaucracy Autocracy.

http://subprimeregulations.blogspot.com/2015/07/just-before-fall-of-berlin-wall.html

Not a Model: A fact which cannot be disputed is the weakening of human personality in the West while in the East it has become firmer and stronger…. There are telltale symptoms by which history gives warning to a threatened or perishing society. Such are, for instance, a decline of the arts or a lack of great statesmen. Indeed, sometimes the warnings are quite explicit and concrete. The center of your democracy and of your culture is left without electric power for a few hours only, and all of a sudden crowds of American citizens start looting and creating havoc. The smooth surface film must be very thin, then, the social system quite unstable and unhealthy… But the fight for our planet, physical and spiritual, a fight of cosmic proportions, is not a vague matter of the future; it has already started. The forces of Evil have begun their decisive offensive.

Loss of Will: No weapons, no matter how powerful, can help the West until it overcomes its loss of willpower. In a state of psychological weakness, weapons even become a burden for the capitulating side. To defend oneself, one must also be ready to die; there is little such readiness in a society raised in the cult of material well-being. Nothing is left, in this case, but concessions, attempts to gain time, and betrayal. Western thinking has become conservative: The world situation must stay as it is at any cost; there must be no changes. This debilitating dream of a status quo is the symptom of a society that has ceased to develop.

My comment:

The fearful response to Covid was another occasion in which the holy intergenerational contract Edmund Burke wrote about was violated.

https://perkurowski.blogspot.com/2020/10/all-we-are-saying-is-give-herd-immunity.html

Humanism and Its Consequences: How did the West decline from its triumphal march to its present debility? … we recoiled from the spirit and embraced all that is material, excessively and incommensurately… gaps were left open for evil, and its drafts blow freely today…  a total emancipation occurred from the moral heritage of Christian centuries with their great reserves of mercy and sacrifice… becoming ever more materialistic… man’s sense of responsibility to God and society has grown dimmer and dimmer.

My comment: 

“The Western World was built-up with lots of risk-taking resulting from its Christian heritage.”

https://subprimeregulations.blogspot.com/2010/10/god-make-us-daring.html

My comment: 

“Peter L. Bernstein wrote that the boundary between the modern times and the past is the mastery of risk, since for those who believe that everything was in God’s hands, risk management, probability, and statistics, must have seemed quite irrelevant. I myself cannot but speculate on whether we’re not leaving out God’s hand, just a little bit too much.

https://subprimeregulations.blogspot.com/2008/10/we-need-brand-new-bank-regulations.html

An Unexpected Kinship: The current of materialism which is farthest to the left, and is hence the most consistent, always proves to be stronger, more attractive, and victorious. Humanism which has lost its Christian heritage cannot prevail in this competition. The Communist regime in the East could endure and grow due to the enthusiastic support from an enormous number of Western intellectuals who (feeling the kinship!) refused to see communism’s crimes, and when they no longer could do so, they tried to justify these crimes… In our Eastern countries, communism has suffered a complete ideological defeat; it is zero and less than zero. And yet Western intellectuals still look at it with considerable interest and empathy, and this is precisely what makes it so immensely difficult for the West to withstand the East.

My comment:  

“I automatically learned to classify all that is repugnant as an »inheritance from the past», and all that is attractive as the »seed of the future». With the aid of this automatic classification, it was still possible for a European in 1932 to visit Russia and continue to be a communist.” Arthur Koestler, “The Invisible Writing” 1954.

https://perkurowski.blogspot.com/1999/05/all-bureaucrats-should-be-created-equal.html

Before the Turn: There is a disaster which is already very much with us. I am referring to the calamity of an autonomous, irreligious humanistic consciousness.

On the way from the Renaissance to our days we have enriched our experience, but we have lost the concept of a Supreme Complete Entity which used to restrain our passions and our irresponsibility. We have placed too much hope in politics and social reforms, only to find out that we were being deprived of our most precious possession: our spiritual life.

It is not possible that assessment of the president’s performance should be reduced to the question of how much money one makes or to the availability of gasoline.

Today it would be retrogressive to hold on to the ossified formulas of the Enlightenment. Such social dogmatism leaves us helpless before the trials of our times.

We cannot avoid reassessing the fundamental definitions of human life and human society. Is it true that man is above everything? Is there no Superior Spirit above him?

If the world has not approached its end, it has reached a major watershed in history, equal in importance to the turn from the Middle Ages to the Renaissance. It will demand from us a spiritual blaze; we shall have to rise to a new height of vision, to a new level of life, where our physical nature will not be cursed, as in the Middle Ages, but even more importantly, our spiritual being will not be trampled upon, as in the Modern Era.

My comment: 

In Geocentric and Heliocentric terms, do risks to bank systems revolve around what’s perceived as risky or what’s perceived as safe? Could I be silenced by the Neo-Inquisition?

http://subprimeregulations.blogspot.com/2023/04/in-my-heliocentric-fight-against.html

"This ascension is similar to climbing onto the next anthropological stage. No one on earth has any other way left but—upward."

[Amen]

Where do I come from? 

http://subprimeregulations.blogspot.com/2004/11/some-of-my-early-public-opinions-on.html

World Bank, more than a “Knowledge” bank, a “Besserwisser” bank, be the “Wisdom” bank I know you could be; or, if that sounds too haughty, at least aspire to be “The Common Sense” bank.

A “Knowledge” bank might think that assets perceived as risky could be risky for banks. A “Wisdom” bank understands that what could be especially risky for banks, and for bank systems, is what is perceived as safe.

A “Knowledge” bank might think that it is great for banks to avoid taking risks.

A “Wisdom” bank knows that the most important function for banks is to take intelligent risks on behalf of society.

A “Knowledge” bank might agree with the Basel Committee’s bank capital requirements based on perceived risks.

A “Wisdom” bank would think much more in terms of not distorting credit allocation, and, if that’s not possible, in terms of capital requirements for banks with a purpose, like on perceived chances of fostering human and natural capital wealth

A “Knowledge” bank, if it has to distort the allocation of bank credit, might agree with bank capital requirements against sovereigns based on credit ratings.

A “Wisdom” bank, in such a case, would much more prefer to base the bank capital requirements on a good governance index.

A “Knowledge” bank might say: “We know it all”. A “Wisdom” bank, would understand “We know Jack shit!”

Or, if aspiring to becoming the “Wisdom bank” sounds too haughty, the World Bank it should at least aspire to be “The Common Sense” bank.

"God make us daring!"

Blekinge Museum: A museum... of my times gone by

About a month ago I had the chance to visit a wonderful small regional museum in Sweden, the Blekinge Museum. It lies very close to my recently deceased mother’s family house, in which I spent a lot of time in my youth. It was a shocking and a humbling experience. It was not a museum of very old times gone by; it was a museum of so much of, since 1950, my times gone by.

Images of heavy horses pulling carriages full of hay, Olivetti accounting machines, telephone exchanges with hundreds of cables, old bicycles, wrinkled by rough seas rowing boats, and hundred similar items that I have lived with, but that mostly no longer exists, and are much less used, shouted out… “Per, what on earth do you know about tomorrow… what does anyone know?”

Coming out of the museum, more than ever, I felt like praying “God make us daring”; or at least God make my children, grandchildren and their descendants daring, so that they are not among the so many to be left behind… doomed (by automation and robots) to end up like the heavy horses of my time. God let them live free, and faraway from the high priests of complacency.

And as for me, as an economist, as a citizen, as a parent and grandparent, if I only look back, and do not do our utmost to imagine what lies around the corners of tomorrow then, like old soldiers (and heavy horses) I might perhaps just better fade away.

Does all what we older have lived not mean anything for the young? Of course, it should signify a lot… but much more in terms of wisdom, than in terms of knowledge.

The sad fact that my mother had passed away just weeks earlier, on February 10, clearly made me reflect on our intergenerational responsibilities.

PS. Since 2023, blessed by in my lifetime being able to dialogue with AI, ChatGPT so as to get a glimpse of the future, more questions arise daily. E.g., whether if driving instructors will be among the many Heavy Horses of tomorrow.

@PerKurowski

The Basel Committee’s risk weighted capital requirements for banks, is one cultural genocide of the western world

Frequently we read about how the destruction of monuments amounts to cultural genocides. But are monuments all there is about cultural heritages? No! Also such heritages as a cultural willingness to take risks.

In 1988, with the Basel Accord, Basel I, regulators introduced risk based capital requirements for banks; which were further amplified in 2004 with Basel II.

That regulation allows banks to earn higher risk adjusted returns on equity when holding “safe” assets, than when holding “risky” assets.

The layer of regulatory risk aversion it introduced, made banks abandon financing the riskier future, in order to just refinance the safer past and present.

The willingness to take risks is part of the cultural heritage of my western world, in churches we sang a psalm that prayed for “God make us daring”.

The willingness to risk making mistakes, has provided the western economies with the raw material necessary for the successes that helped to buildup its economy.

“A ship in harbor is safe, but that is not what ships are for.” John A Shedd

But now: “If God can’t make our bankers sufficiently coward, then we have to!” Bank regulators

In short, the Basel Committee for Banking Supervision’s regulatory imposed risk aversion, constitutes a destruction of a cultural heritage of our western world.

And all for nothing! The regulators justified it with that it would make our banks safer. What nonsense! Major bank crises never ever result from excessive exposures to something ex ante perceived as risky; these always result from either unexpected events, or excessive exposures to what was ex ante perceived as very safe, but that ex post turned out to be very risky.

“May God defend me from my friends, I can defend myself from my enemies” Voltaire

PS. Actual risk weights: AAA to AA rated 20%, Below BB- 150%. Can it be more loony than that?

The homeland defense

Recently, the commander in chief of the armed forces of Sweden opined his country could probably defend against a foreign invasion for about seven days. Seven days! No more? As you can imagine heated discussions began. 

As my mother is Swedish and therefore speculating I know something of the realities of this country, my first reaction was: It all depends on who the invader is. If for example Norway brought along the oil Sweden does not have, perhaps not even a single bullet would suffice, as no one would like to register the death of a single Norwegian soldier died. If instead the invader was the "archenemy" Russia, they may wish to have ammunition for 7 months, if for 7 or 70 years is not possible. 

And I wondered: For how many days are the military in Venezuela prepared to defend their homeland? I imagine that there the answer would depend on who answers ... and we might be better off not hearing it. 

Back to Sweden: If the preparation of the military is just for seven days, for how many days is the Swedish citizen willing to defend his country? I say this because this is as or even more important than the capacity of the military for the final result, and countries such as Sweden who have abolished compulsory military service, might be signaling some lack of wanting. 

And I ask: How many days would the Venezuelan be willing to defend? Would it be the same regardless of whether the invader is Brazil, Colombia, Cuba, the United States, Russia or China? 

Getting back to Sweden: Today, what means preparing for war? I ask this because if I were Defense Minister of a country, before asking more from the military, I would perhaps wish to prohibit all youngsters between 11 and 18, during one full year, to use all modern digital communication tools. And this in order to make them learn about the real world, in a real way and not only by virtual means. For example so they learn to orient themselves with a compass and must not always depend on a GPS to tell them where they find themselves.

And I wondered: what does it mean in Venezuela to defend the country from a foreign invasion, when we can’t even defend the access of our youth to their own streets, leaving these in the hands of the underworld? 

Back to Sweden: And are the territorial boundaries the most important frontiers to defend? What about communication boundaries, or regulatory boundaries? A country such as Sweden which became what it is because of the ability and willingness of its citizens to take risks, and in whose churches they prayed "God make us daring", now, and without realizing it, has allowed all its banking system to be invaded by a Basel Committee which with its regulations imposes a stupid aversion to what they perceive as risky. What can be more risky for a country than an exaggerated risk aversion? 

And I wondered: And are the borders of our land really so important when some military and some civilian, without one single bullet, seem willing to give up so much of our national sovereignty to another country? 

And I calmed myself somewhat by thinking that in truth seven days are few and insufficient days, only if the invader’s invading capacity is of eight days or more. 

PS. By the way my mother does not harbor any fear that hordes from the Venezuelan plains, commanded by a Genghis-Zamora-Khan, would invade Sweden. Phew what a relief!

Translation from El Universal, Caracas