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

• 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.

The Fed's unveiling of relaxed capital rules for large banks signals a notable shift in regulatory stance, as it proposes to reduce the capital surcharge for globally systemically important banks (GSIBs). While this recalibration suggests a more accommodative environment for banks, the emphasis on maintaining capital above 2019 levels hints that the regulatory body is balancing growth with financial stability. Overall, this could influence market sentiment towards banks and impact the dollar and fixed income as investors reassess the implications for monetary policy moving forward.