Banks’ leverage ratio ‘over-calibrated’, says Fed’s Bowman
Heavy capital requirements causing illiquidity in Treasury market, governor says
Banks are not offering enough liquidity in the Treasury market because they have been constrained by heavy capital requirements, a governor at the US Federal Reserve has said.
Speaking at a conference in Kansas on February 5, Michelle Bowman said the illiquidity in the market for US government bonds could be partially attributed to the increase in leverage-based capital requirements, especially considering that the largest banks act as primary dealers.
“In periods of banks’ balance sheet expansion
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