Leverage ceilings of the kind being proposed in international fora could be useful, argues a paper published by the Bank of Canada in December. The authors draw this conclusion based on the Canadian experience.

Banks in the country have been subject to a regulatory ceiling on an unweighted leverage ratio since the early part of the 1980s, and the authors find that leverage at the major Canadian banks was largely stable in the lead up to the crisis, compared to financial institutions in countries