Nijolė Valinskytė, Erika Ivanauskaitė, Darius Kulikauskas, Simonas Krėpšta, 12 April 2018

The leverage ratio requirement should supplement microprudential the risk-based capital requirements framework to serve as a backstop that ensures sufficient levels of equity in banks. However, the 3% level for this ratio should not be treated as the end-goal, as recent research on optimal capital levels points to substantially higher leverage ratios. This column examines the relationship between risk-based and leverage ratio requirements, and the motivation for the macroprudential use of leverage ratio requirements.

Aerdt Houben, Jan Kakes, 30 July 2013

Financial cycles have increasingly diverged across members of the Eurozone. National macroprudential tools are thus key to managing financial imbalances and protecting Europe’s economic integration. This column discusses research suggesting that reasonable macroprudential policies by the GIIPS countries in the euro’s first decade would have helped avoid much pain in Italy, Portugal and Spain. Greece’s public debt problems were far too large and its banks could not have been shielded with macroprudential policies.

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