Leverage ratios
FSB finalises recommended action on asset management risks
Set of recommendations tackle liquidity, leverage, op risk and securities lending; work on globally systemic designations pushed back until 2019
IMF paper shows US monetary conditions impact EM leverage
Impact is more pronounced for firms that are dependent on external financing, authors find; sample shows financial conditions have the ability to influence borrowing constraints
Market forces drive deleveraging as well as regulation – Caruana
BIS chief says markets are forcing discipline on banks, although he concedes regulation is playing a role as well; discussion participants point to tensions in regulatory framework
‘Strong’ correlation between leverage and financial connectivity – paper
Irish paper shows interconnected banks experience 'sharper contractions' in lending when faced with a shock; findings could have consequences for Basel III
BIS research tests leverage ratio with adjusted DSGE model
Authors design a model with both leverage ratio and variable risk-weighted capital requirements, finding a range of benefits to constraining leverage
BoE deputy clashes with academics over use of leverage ratio
Shafik disagrees with paper that argues leverage ratio “harms” pass-through of monetary policy – leverage ratio is “here to stay” says deputy governor
Italian paper looks at effects of Basel leverage ratio on repo and refinancing
A move to higher leverage ratios by eurozone banks has not decreased their repo and refinancing activities, a Bank of Italy paper says
FSB unveils proposals to curb asset management risks
Consultation tackles liquidity mismatch, leverage, op risk and securities lending, with the aim of heading off potential trouble from the recent growth of asset management
EU could go it alone on leverage ratio, says MEP
Swinburne says clearing should be shielded from ratio “if Basel does not deliver”
Italian firms' leverage well above average, study finds
Italian non-financial companies’ leverage ratios are significantly above the eurozone average, a working paper shows
Leverage ratio as high as 5% could yield net benefits, BIS economists say
Authors say there is ‘considerable room for manoeuvre’ when it comes to setting a leverage ratio above the current Basel III minimum of 3%
EBA: European bank capital improving but concerns remain over profits and assets
European banks are improving their capital and leverage ratios but are suffering from low levels of profitability and problems with non-performing loans, transparency exercise finds
Danish paper explores prevalence of interest-only mortgages
Interest-only loans lead some families ‘to save less and increase their leverage’ assets, which could pose a financial stability risk, research shows
BoE’s Miles cautions against use of policy rate for financial stability ends
Use of monetary policy to tackle financial stability goals is less efficient than setting higher capital requirements, outgoing MPC member says
Kuwaiti banks perform well under stress, report shows
Banks in Kuwait showed resilience during stress tests and strengthened their balance sheets in 2014, financial stability report shows; conventional banks more cost-efficient than Islamic
New Zealand paper calls for clearer financial stability aims
Researchers argue more guidance is needed on how and when macro-prudential policy will be used, pointing to the lack of hierarchy between distortions
Philippines 5% leverage ratio causes few ripples
Central Bank of the Philippines brings in one of the highest basic leverage ratios globally, but local firms are unconcerned
Leverage ratio begins to bite for FX derivatives
The capital-intensive rule for banks, which has already affected the rates and credit world, is starting to hit FX - with clients expected to bear the brunt of higher costs
Finma's Branson calls for Basel leverage ratio hike
The minimum Basel leverage ratio for large banks should be higher than 3%, says Finma CEO Mark Branson, noting "the world has moved on" since it was initially set
BIS research posits test for unsustainable credit growth
Authors link long-run credit growth with leverage and debt service ratio, proposing a model they claim would have helped predict the 2008 financial crisis three years before it struck
Basel Committee signals shift towards Basel III implementation
With Basel III standards largely finalised, the Basel Committee’s 2015-16 work programme indicates focus on implementation and efforts to shore up confidence in capital ratios
Sweden's central bank and macro-prudential regulator clash over leverage ratio
Riksbank calls for stricter and earlier implementation of Basel III measure a day after Financial Supervisory Authority rejects proposals
BoE’s Taylor defends complexity of leverage ratio plans
External FPC member says countercyclical leverage ratio may be more complex than a flat rate, but allows the Bank of England to be less heavy-handed with the rule and avoid perverse incentives
BIS paper finds leverage ratio more countercyclical than other capital ratios
Working paper finds evidence the leverage ratio is ‘significantly’ more countercyclical than ratios of capital to risk-weighted assets, although the effect is less powerful during crises