As low as possible & As high as necessary.
MCR = 1.5 is in the current system the best balance
Reason?
Table shows debt based on MCR, when using debt to buy BTS and borrow again (10 times):
DEBT MCR
8.51 1.1
6.26 1.15
4.87 1.2
3.95 1.25
3.32 1.3
2.85 1.35
2.50 1.4
2.22 1.45
2.00 1.51.82 1.55
1.67 1.6
1.54 1.65
1.43 1.7
1.33 1.75
1.25 1.8
1.18 1.85
1.11 1.9
1.05 1.95
1.00 2
MCR = 1.5 gives the debt position a slightly advantage, to compensate risks.
With MCR 1.6-1.75 (DEBT< MCR), the dept position has no real advantage.
when will it end, at 1.0?
MCR should end at 1.5,
ccr can end at 1.0