Bundesbank deputy president Sabine Lautenschläger said in a speech yesterday that it would be unwise to think leverage ratios – defined as a bank's accounting equity divided by its total assets – could be simultaneously "simple, comprehensive and comparable".

Proponents of the leverage ratio, Lautenschläger said, often paint it as "a simple fallback measure for dealing with an increasingly complex banking system, a kind of panacea". But the leverage ratio has major drawbacks, she argued.

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