The basic argument here is:

(1)

central capital mandates lower capital access (particularly for the worse off, and

(2) central capital mandates may be overbroad and target financial institutions that are doing just fine is broadly correct.

I think the biggest potential flaw with this argument is that it’s not clear there is an optimal, sufficiently-narrow-yet-sufficiently-broad level of regulation. You might prefer an overly broad system that has marginally less access to capital but also fewer crashes (think about the booms-and-busts of the late 19th century as an analog – Austrians argue that the market was overall better off without central banking in the long run, but everyone else argues that even if that were true, it’s preferable to have slightly slower but consistent growth).

And I think there’s reason to doubt the alternatives Gurrea-Martinez and León propose. I’m not sure that using taxes instead of regulations would be that much less broad. There already is some regional variation under Basel, and making it more regionalized… seems to defeat the purpose of Basel as an international organization? (I almost think the logical conclusion of this article is get rid of Basel and let national banks have free reign again… except wasn’t that the original problem Basel set out to solve?) And isn’t “comply and explain” simply just saying “let the markets solve”? Which… again… seems like the entire point that Basel set out to solve. Of course, you may believe that markets are perfectly adequate, but then why have Basel to begin with?