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Part V Liquidity and Leverage, 23 The Leverage Ratio

From: Gleeson on the International Regulation of Banking (3rd Edition)

Simon Gleeson

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 21 May 2024

Basel 3 — Tier 1 capital — Leverage — Basel committee on Banking Supervision

This chapter discusses the leverage ratio under Basel 3. The leverage ratio was initially implemented as a disclosure standard, with the aim of becoming a mandatory requirement as from 1 January 2018. Basel 3 provides that the original 2014 standard should become binding as a requirement from 2018 to 2021, with the revised Basel 3 requirement taking effect as from 1 January 2022. All banks are required to maintain a leverage ratio of 3 per cent at all times. However, in addition to the 3 per cent requirement, they must also meet a leverage ratio buffer requirement. Both of these requirements must be met with tier 1 capital. The leverage ratio buffer will be set at 50 per cent of a bank's G-SIB buffer.

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