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The
Financial Policy Committee published the results of its review of the leverage ratio today: see
here (
pdf). In its document, the FPC sets out the power it would like
HM Treasury to grant it: the power to direct the
Prudential Regulation Authority to set leverage ratio requirements and buffers for PRA-regulated banks, building societies and investment firms, including: a minimum leverage ratio requirement; a supplementary leverage ratio buffer that will apply to G-SIBs and other major domestic UK banks and building societies, including ring-fenced banks; and a countercyclical leverage ratio buffer.
The document explains the FPC's intentions in respect of this new power of direction. For example, the minimum leverage ratio requirement would be set at 3%.
Publication of the review was accompanied by an exchange of letters between the
Governor of the Bank of England and the
Chancellor of the Exchequer: see
here (
pdf) and
here (
pdf).
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