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Endgame manoeuvre: US banks put SLR reform back in spotlight

Plan to ease Basel III brings renewed focus to impact of leverage ratio on US Treasury market

SLR in spotlight
Credit: Risk.net montage

It’s always been a blunt instrument. The US supplementary leverage ratio (SLR) was designed to act as a capital backstop for banks. But the Covid pandemic exposed a potentially fatal flaw – that it became instead a binding constraint in times of stress.

Regulators promised to review it, but the idea seemed to drift into the long grass. Now banks are making noise about the ratio in the hope of putting a review back on the agenda.

In March 2020, as the Federal Reserve expanded its balance sheet to

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