Fed eases capital restriction on large US banks
US repo rates stray into negative territory as investors make massive flight to safety
The Federal Reserve has relaxed a Basel III capital rule for large US banks in a bid to ease market strains caused by a flight to safety.
Some repo trades were made at negative rates in recent days in a further sign that US financial markets remain under considerable strain.
The Fed’s board voted to remove both US Treasuries and banks’ reserves from the calculation of supplementary leverage ratios for the next 12 months. This means banks with more than $250 billion in assets will no longer
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