This move aims to boost liquidity in the $29 trillion Treasury market and reduce borrowing costs for the government. The SLR, introduced after the 2008 crisis, requires banks to hold a certain amount of capital against their total leverage exposure, including assets like Treasuries. The proposed change would likely exclude Treasuries and central bank deposits from the SLR calculation, allowing banks to hold more of these low-risk assets without impacting their capital requirements.
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Bloomberg have popped up an update to this, again in brief:
US regulators are considering changes to a key capital rule for major banks, according to people familiar with the matter.The Federal Reserve, Federal Deposit Insurance Corp (FDIC), and Office of the Comptroller of the Currency are reviewing adjustments to the enhanced supplementary leverage ratio (eSLR) — a rule that applies to the largest U.S. banks, including JPMorgan Chase, Goldman Sachs, and Morgan Stanley.Under the proposal, the capital requirement for bank holding companies could be reduced to a range of 3.5% to 4.5%, down from the current 5%. The banks' operating subsidiaries would likely see their requirements fall to the same range, compared to the existing 6%, the sources said, speaking on condition of anonymity due to the non-public nature of the discussions. This article was written by Eamonn Sheridan at www.forexlive.com. Read More Details
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