Date
18 November 2018
The US central bank says it aims to simplify the capital regime for big banks while also ensuring financial system safety. Photo: Bloomberg
The US central bank says it aims to simplify the capital regime for big banks while also ensuring financial system safety. Photo: Bloomberg

Fed proposes adjustments to bank capital rules

The US Federal Reserve on Tuesday proposed new rules that could allow some large banks to reduce the amount of capital they must hold as a cushion against a future economic shock, Reuters reports.

The proposal may clear the way for some large banks to reduce their capital levels in the future but the largest firms on Wall Street are not likely to get such relief, the report said.

The plan is expected to reduce bank paperwork and also make it easier for regulators to monitor the health of banks, Randal Quarles, the top Fed official in charge of regulations, was quoted as saying.

“Our regulatory measures are most effective when they are as simple and transparent as possible,” Quarles, the Fed Vice Chairman for Supervision, said in a statement.

The US central bank said the proposed changes are likely to somewhat increase the amount of capital required for the 30 largest banks known as GSIBs or global systemically important banks.

The measures should modestly decrease the amount of capital required for banks smaller than the GSIBs, it said.

“No firm is expected to need to raise additional capital as a result of this proposal,” the Fed said in its statement.

Banks and other stakeholders will have 60 days to comment on the proposal that is likely to take effect next year.

The new capital standards would be the first reform of capital standards conceived after the decade-old financial crisis.

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RC

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