Reserving judgement: the BoE’s divisive leverage ratio plan

Central bank reserves exemption may squeeze interbank liquidity, raise capital requirements

risk-1116-mark-long-alien-web

It all sounded so easy. Amid growing industry complaints about rising capital requirements, the Bank of England (BoE) decided to pull a rabbit out of the hat, and exempt central bank reserves from the leverage ratio, offering an estimated £11 billion ($13.4 billion) capital saving for the seven UK banks that are subject to the rules. The argument was that charging capital for money parked at a central bank would deter the industry from using central bank liquidity facilities, potentially

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: