Fed's Bowman (voter) unveils relaxed bank capital rules; Proposed GSIB surcharge changes would reduce capital requirement and totality of changes to capital rules amount to a 'sensible recalibration' of post-crisis rules
Importance
Level 1
- Totality of capital rule changes will maintain requirements above 2019 capital levels.
- Regulators will vote on revised capital rules in coming weeks that will reduce large bank requirements by 'a small amount'.
- Fed and other agencies to vote on revised Basel capital rule proposal and surcharge for globally risky or "GSIB" banks.
- Regulators expect new Basel proposal will lead to small increase in big bank capital requirements and GSIB surcharge proposal will reduce them.
- Regulators will also propose new 'standardized approach' for risk-based capital requirements for smaller banks.
- New Basel proposal would increase capital requirements for operational and market risk, but accompanying stress test changes will leave those levels largely unchanged.
- Revised GSIB surcharge proposal would index coefficients to account for economic growth, downgrade risk calculation for short-term funding.
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