Greenspan warns of double-digit inflation if monetary expansion is not curbed

Former federal reserve chairman Alan Greenspan said banks should be forced to hold more capital on their balance sheets – a sentiment that supports position on the issue of the finance chiefs from the Group of 20 nations.

Interacting via teleconference with the Antique India Markets Conference in Mumbai, the 83-year-old former policy maker said capital requirements even during non-crisis periods needed to have a larger buffer and significant changes were needed.

Noting that the world economy was recovering fairly quickly from the financial crisis

Greenspan called for tighter capital requirements two days after a G-20 meeting in London proposed that banks increase the quantity and quality of assets they hold in reserve for use when economies falter.

The drive to revamp regulation comes after excessive risk-taking by the world's banks resulted in $1.61 trillion in losses and writedowns, taxpayer-funded bailouts and a global recession.

Greenspan said that financial intermediaries allowed institutions to go into default by taking on excessive risk. He added that there was no substitute for capital and the crisis could not have been prevented without changing human nature.