US G-Sibs face higher add-ons in Barr’s surcharge framework review

Fed vice-chair proposal to reduce ‘cliff effects’ could add between 40bp and 10bp to capital requirements

A proposal put forward by the Federal Reserve’s vice-chair for supervision, Michael Barr, to increase the sensitivity of the global systemically important banks (G-Sib) surcharge framework could result in all eight US systemic banks incurring higher Common Equity Tier 1 capital add-ons.

Aimed at reducing the current system’s ‘cliff effects’, the proposed change would measure the G-Sib surcharge in 10-basis point increments instead of 50bp. A Risk Quantum analysis of the surcharges determined

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