The Basel III framework of June 2013, and as revised in January 2014, introduced a simple transparent, non risk-based leverage ratio to act as a credible supplementary measure to the risk-based capital requirements. The framework designs the leverage ratio as a simple backstop mechanism and, in the context of its implementation in the EU legislation, EACB strongly advises against a measure that goes beyond such design.
For the European cooperative banks it is essential that the amendments to the leverage ratio, to be implemented with the Commission delegated act under Art. 456(1)(j) CRR, provide for a more balanced specification of such measure. Finally, regarding the leverage ratio as a Pillar 1 requirement, EACB considers it crucial that the European decision making process is allowed to take its course without being prejudiced. Therefore, EACB holds it important that Member States refrain from taking any policy action implementing a national version of the leverage ratio during the calibration period.
The paper focuses on the following areas:
- General design of the ratio;
- On-balance sheet exposures;
- Treatment of SFTs (Securities financed transactions);
- Treatment of derivatives;
- Proportionality measures.
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