Leverage ratios
Regulations have net benefit despite cost to dealers – BoE paper
Working paper finds leverage requirements have raised costs for dealers in normal times, with the impact larger than earlier studies imply
Basel Committee flags shortfalls in implementation
European Union is yet to fully comply with the liquidity coverage ratio, while many jurisdictions are lagging behind in other areas
Fixing the ‘perverse incentives’ in the SLR
Richard Heckinger warns the US’s supplementary leverage ratio in its current form discourages banks from using central counterparties
Fed’s Powell looks for ways to reduce ‘unnecessary burden’ of regulation
Fed governor tells senators he sees room in some aspects of post-crisis reforms to ease the burden on banks, though he stresses the need for “vigilance” against new risks
BIS’s Coen warns of danger in delays as output floors remain stuck
Long phase-in periods increase risk of “dilution or backtracking”, says BCBS secretary-general; remains vague on timetable for Basel III completion
Riksbank researchers flag benefits of major capital boost
Significant increase in the leverage ratio for Swedish banks could bring net social benefits, study finds
ECB issues guidance on leveraged transactions
Senior management must have a “comprehensive” view of all leveraged loans
Let the market regulate banks – FDIC’s Hoenig
Vice-chairman offers proposal that would take an axe to risk-based capital, stress testing and parts of the Volcker rule
Growth of shadow banks led by risky investment vehicles – FSB
Shadow banks continue to gain ground, with those offering liquidity and maturity transformation showing some of the fastest growth
Extended monetary easing in US has larger impact abroad – paper
IMF paper examines the impact of periods of prolonged monetary easing on risk-taking behaviour; leverage ratio and other measures of vulnerability increase
Croatian governor warns of further financial crises
It is probably time for central banks to “get out” of expanded balance sheets, Boris Vujčić says
Tax cuts affect bank leverage and liabilities – BIS paper
Tax cuts have different effects on different banks, authors find; better-capitalised banks increase their assets, while weaker ones clean up their balance sheets
FSB finalises recommended action on asset management risks
Set of recommendations tackle liquidity, leverage, op risk and securities lending; work on globally systemic designations pushed back until 2019
IMF paper shows US monetary conditions impact EM leverage
Impact is more pronounced for firms that are dependent on external financing, authors find; sample shows financial conditions have the ability to influence borrowing constraints
Market forces drive deleveraging as well as regulation – Caruana
BIS chief says markets are forcing discipline on banks, although he concedes regulation is playing a role as well; discussion participants point to tensions in regulatory framework
‘Strong’ correlation between leverage and financial connectivity – paper
Irish paper shows interconnected banks experience 'sharper contractions' in lending when faced with a shock; findings could have consequences for Basel III
BIS research tests leverage ratio with adjusted DSGE model
Authors design a model with both leverage ratio and variable risk-weighted capital requirements, finding a range of benefits to constraining leverage
BoE deputy clashes with academics over use of leverage ratio
Shafik disagrees with paper that argues leverage ratio “harms” pass-through of monetary policy – leverage ratio is “here to stay” says deputy governor
Italian paper looks at effects of Basel leverage ratio on repo and refinancing
A move to higher leverage ratios by eurozone banks has not decreased their repo and refinancing activities, a Bank of Italy paper says
FSB unveils proposals to curb asset management risks
Consultation tackles liquidity mismatch, leverage, op risk and securities lending, with the aim of heading off potential trouble from the recent growth of asset management
EU could go it alone on leverage ratio, says MEP
Swinburne says clearing should be shielded from ratio “if Basel does not deliver”
Italian firms' leverage well above average, study finds
Italian non-financial companies’ leverage ratios are significantly above the eurozone average, a working paper shows
Leverage ratio as high as 5% could yield net benefits, BIS economists say
Authors say there is ‘considerable room for manoeuvre’ when it comes to setting a leverage ratio above the current Basel III minimum of 3%
EBA: European bank capital improving but concerns remain over profits and assets
European banks are improving their capital and leverage ratios but are suffering from low levels of profitability and problems with non-performing loans, transparency exercise finds