US banks rue missed opportunity to reform G-Sib surcharge

As method 2 drifts away from Basel, critics fear comparability and competitiveness will suffer

When the US Federal Reserve decided to produce its own variation of a risk-based capital surcharge that was meant to apply uniformly to all global systemically important banks (G-Sibs), the regulator acknowledged there might be some drawbacks.

One specific difference between the approach used by the Basel Committee on Banking Supervision – which became known as method 1 in the US – and the Fed’s version, dubbed method 2, would have particularly serious ramifications.

Method 1 is calculated on

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